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A government-sponsored review of superannuation funds was released today. The West offers an overview (MySuper to boost nest eggs,and Retirement takes a back seat to footy, 6 Jul 10).
Apparently, most Australians are not interested in managing their super funds.
The Cooper review of Australian superannuation has "backed the creation of MySuper -- a default super fund." Interesting phrasing: "backed" the creation... Was this an independent, fact-finding review -- or was it a typical example of outside experts called in to justify a management decision? No worries, let's look at the reaction to MySuper.
MySuper is intended to be "a default super fund for the 80% of Australians who take almost no interest in the day-to-day management of their retirement." It will offer no investment options and low fees. Every super investment company will be required to offer MySuper.
The idea is, the average super contributor will be able to compare the MySuper offerings from various investment companies. The only variables will be the annual fee and overall performance.
So what could be wrong with that?
The Investment and Financial Services Association (IFSA) says that the MySuper proposal is paternalistic.
Now there's a surprise.
What does the average punter know about superannuation?
- It's a compulsory payment -- by the employer, so who cares.
- The super money can't be touched till you're about ready to retire -- so who cares. Except for the few who are about to retire.
- The super investment funds can lose half of your 40 years savings in just one year of global financial crisis. And there's nothing you can do about it.
- You can select a tailored mix of investments -- if you believe that your guesses can out-perform the knowledge of finance industry "experts".
- Perhaps the average punter also realises that the government encourages super so that it -- the government -- will pay less in pensions.
- There are so many options that it's impossible to compare investment funds -- so why bother.
- If you get advice from a financial advisor -- you will be paying the advisor for that once-off advice -- for the rest of your investing life.
For the average punter, you may as well ignore your super "investment". There's nothing much you can do about it. If highly paid "experts" can't make a profit, who can?
Oh, yes. The companies represented by IFSA can make a profit. For you? Maybe. For themselves? Definitely!
The article is not explicit but you have to guess, that IFSA represents super investment fund companies. Companies which invest enormous amounts of your money. Companies which may -- or may not -- make a profit for you each year. Companies which are almost guaranteed to make a profit for themselves.
Do those IFSA companies care about the investors? Why should they!
The IFSA companies want to keep you -- for your money. Any suggestion -- such as a simplified and universal My Super -- will allow you to make an informed choice. You may choose to do something else with your money. Oh dear!
Of course IFSA don't like the MySuper concept. Calling it "paternalistic" is -- in their view -- "bad". Giving the customers more -- clearer -- information may shift the power of choice to the customer.
And that -- for IFSA -- must be a bad thing.
Agamedes Consulting. Support for your thought: email nick leth at gmail dot com |
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