Updated October 31, In general, very few people in Australia now know what they will have to live on when they retire. ABC's Alan Kohler looks at the lottery that is our superannuation system. It doesn't take more than a few moments thought to understand that Australia's superannuation system is not the paragon it's cracked up to be. Savers and retirees are fully exposed to both market and longevity risk, there is
Consolidating your super with qsuper diversified little regulation around where the money should be invested and virtually no regulation of fees.
In other words, Australians are required by law to save 9 per cent of their salaries in an effectively unregulated privately managed system. The industry will argue that it is, indeed, tightly regulated, but not where it counts. Other utilities' prices are set according to Consolidating your super with qsuper diversified returns on capital of the providers; in super, not only are fees essentially unregulated, but few customers even know what they are.
Those who can actually work out the dollar amount by multiplying the basis points by the amount in their fund, which is not very many people, would have to make sure they include all the different fees in their statement - administrative and investment fees. So the superannuation industry is in the happy position of providing a service that is mandated by law where the price is both unregulated and effectively unknown. I met an English investment manager for a coffee yesterday who, unsolicited, expressed amazement at the levels of investment fees in this country.
But that's not the worst thing about our superannuation system. The worst thing is the brutal risks to which Australians are routinely exposed. Between about and all capital, both private and public, was removed from the support of retirement pensions. Up to that point most corporations, life offices and governments allocated part of their capital to guarantee their employees a certain retirement income.
But in the space of a few years they all rushed out of "defined benefit" super, as it was called, to "defined contribution", or accumulation, funds. Billions in capital was given
Consolidating your super with qsuper diversified to happy shareholders or deployed elsewhere by even happier managers and politicians.
It has taken about a Consolidating your super with qsuper diversified for the risks of this process to become evident.
Consolidating your super with qsuper diversified For the first Consolidating your super with qsuper diversified years the fact that Australian super funds had over-exposed their unknowing clients to equities was not a problem because the stock market boomed.
Now the funds have been going backwards for five years and suddenly the nation's retirement savers are exposed to what is politely called "sequencing risk" - that is, if you want to retire when the market is down, bad luck!
It is a lottery. In the space of two decades we have gone from knowing and not having to worry, to not having faintest clue, and worrying like hell. Many people, realising late in life that they won't have enough, start taking bigger Consolidating your super with qsuper diversified bigger risks as they approach retirement to improve their returns, when the opposite is recommended.
For some this pays; for many it is a disaster. Meanwhile, when we retire we are left to our own devices with a lump of money. Usually, but not always, we consult an adviser.
Sometimes we give the lot to a nice man who then runs off with it. The advisers used to be paid commissions by investment managers, as well as unscrupulous shysters, to ensure that the money found its way back to them. Those commissions are now banned, in the face of a ferocious campaign from the industry, but the money still mostly goes back into "balanced" investment portfolios - that is, shares, property, hedge funds, private equity, bonds and cash - using expensive managers for each category.
As during the saving years, retirees are thus playing the asset markets once again; nobody is guaranteeing them anything. So once they retire, Australians are exposed to the greatest risk of them all: According to the Bureau of Statistics average life expectancy in Australia is now But that's an average - half the people will need to fund a retirement of more than years assuming retirement at 65and many will live much, much longer than that.
Moreover, the crackdown on smoking, the advent of effective anti-cholesterol drugs and advances in cancer research, among other things, will ensure that life expectancy increases dramatically from here. The cost of retiring, already enormous, is set to soar.
Yet just as nobody knows what fees they are paying to have their savings lost, nobody knows what it will cost them to retire and whether they will be able to afford it.
Mind you, it's usually better not to know, because you can't afford it. As Winston Churchill would say, superannuation in this country a riddle wrapped in a mystery inside an enigma.
View his full profile here. First posted October 31, Alan, your comments about fees are accurate but otherwise this is a strange article from the point of view of allocation of risk.
In the end, there are three ways to allocate the risk of funding retirement: The superannuation system was introduced at least partly to avoid a looming liability to the taxpayer. Putting the risk in the hands of the employer carries the same downside that the employer may fall on hard times and be unable to provide the benefit when required. Terms like national disgrace and lottery do not make for informed debate.
Is this the case? Much better off in an industry fund such as one run by the likes of Bernie Fraser. Kohler may prefer not to have shares in his portfolio to avoid conflicts of interest. Check out his disclaimers in Eureka I haven't.
I doubt Bernie would have much involvement in the running any fund apart from his own - presume he's more the equivalent of GoDaddy's Charlene.
I agree with Kohler's sentiments - the only winners are fund managers after my wife's industry super fund showed a loss last year. Completely agree Consolidating your super with qsuper diversified the risk is with the individual. Where does the risk lie otherwise in virtually all other aspects of our lives? With ourselves, the individuals of course! This applies from the moment we get out of bed, cross the road etc. Yes, the risk is with the individual but unlike in other areas of life that is not the last chapter.
Every time one of those 'investment firms' bites the dust, the Commonwealth needs to provide more. How we can remedy that situation I do not know, but that's the cold hard reality.
And by the way, we only ever hear when these companies go bust. We never hear what liability they have caused the Commonwealth and what happened to the perpetrators. Prison would be an expensive but the only appropriate place given the fact that all other
Consolidating your super with qsuper diversified is verboten. Fair comment, but I'm sticking to my guns.
In my view we are each ultimately responsible for our own decisions. That is not a statutory thing, it's just nature - always has been always will be. The examples you mention ACR, Westpoint etc of course have precisely zero to do with the super system.
ACR and Fincorp was Consolidating your super with qsuper diversified simply completely ludicrous failure of regulation or lack thereof in respect of investment offers super or otherwise to the public - we saw another example this week in Victoria, of course. Westpoint of course is still the subject of "action" by our wonderful corporate plod, ASIC.
There were both super and non-super investors in all of these. Their failure had nothing to do with the super system itself. We are moving to a society where no one takes personal blame for own actions.
Risk is with the driver with crossing road near schools. Slow down to 40 or be fined. Obviously kids these days aren't smart enough to either learn or obey rules. a bad marriage partner - and go on a single pension. The risk is also with the people who design these things and manufacture them: Carpets - the same. That is why society employs people to produce such things, as National Standards for the design of roads.
And otehrs, to make sure roads are properly designed. Completely agree that regulation is needed and certainly regulation of super needs to be improved. That is an ongoing process. However, in the end, the buck stops with us as individuals and in my view it is unwise to think otherwise. Clearly Mr Gardener has not done his dough. The idea was good but handing it over the private sector, as with most things, is an unmitigated disaster for ordinary Australians.
All of the super, and indeed annual leave and long service leave entitlements, should be cashed out to one government managed national institution. That institution should invest the funds national building activities - i.
I personally am sick to death of seeing retirement savings and other benefits wiped out by gamblers on the financial markets. Ankelbita does not control his super, except in a superficial way, that the funds have done their utmost to limit as much as possible.
The super fund might condescendingly grant him an explanation of where it is invested - if they feel like it. If he wants to change it from one type of investment to another, he will not be able to do that as he wishes. Teh super funds might allow him a limited choice, after making him wait a while which is their trick, for making sure Consolidating your super with qsuper diversified the risk of crashes, passes to invetors.
That is a lot of rubbish, you can choose investments within your super to varying degrees, if you are unhappy with the choices, you can rollover your balance full or partial to a fund that WILL give you
Consolidating your super with qsuper diversified level of choice you want. I agree that a government backed option for those seeking security has merit so long as the government of the day is not able to plunder the nation's savings.
The rate of return, however, would have to reflect the low level of risk. Private superannuation funds are run for the benefit of the merchant banks, unlike Industry Funds which are run for the benefit of fund members.
Merchant bankers are dying to get their hands on our superannuation but I wouldn't let that lot touch my super in a fit. The Howard govt prised the door open slightly for them, there's no doubt the next Liberal govt will let the pirates in Consolidating your super with qsuper diversified. Bang on the money, FG.
We can look at the US, where the employer runs the super for their employees. Employer goes bankrupt, employees lose everything. Consolidating your super with qsuper diversified. Why you should consolidate your super; How to move all your super into one fund; Why you should.
The forms you need to consolidate your super from other funds into your QSuper account, or transfer your defined benefit to an Accumulation Account. It's now easier than ever to find all your lost super and
Consolidating your super with qsuper diversified it or any other super Strong returns – % 1 year return to 30 June for Diversified.
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Australia's super system...
RO, there is a wide choice of superannuation funds ranging from the industry super funds, through to financial organisations and through to self-managed super funds. And just when I think I've got a handle on it, it all changes The road toll, however, is about half what it was in he 70s. Australia's super annuation system was a con on the working class from the day it was first introduced.
Is this the case?
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I thought many times especially when my? Do the managers of industry funds enjoy the same largese as the managers of commercial funds? However you need to get your facts straight. You are correct, Alan, a disgrace it is! Compulsory DB super included compulsory after tax contributions by the salary earner.
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- THE FORMS YOU NEED TO CONSOLIDATE YOUR SUPER FROM OTHER FUNDS INTO YOUR QSUPER ACCOUNT, OR TRANSFER YOUR DEFINED BENEFIT...
Have I messed up, or just being hard on myself?To compare other super funds suited to your life stage and preferences, visit the choice of a lifestage investment option, four diversified options, four single asset class options and Can I consolidate my super with QSuper?. If you're a short to medium-term investor who wants steady returns, the Diversified Bonds option may be suitable for you. However you should..
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