Our Superannuation system is getting more “1984” by the day.
The Government is trying to legislate a “shared purpose” for superannuation that introduces a requirement for “equity and sustainability” to the existing legal requirement to grow member benefits for retirement.
“Equity and sustainability” sound good on paper, but their subjective nature and broad application make them ripe for politicking of all sorts. Equity for who? Sustainability of what? When applied to large, complex systems like our Superannuation system, this kind of qualitative legislation can be used to advance all kinds of competing agendas under the guise of equity and sustainability.
Further, the big institutional Super funds continue to struggle to put their members’ interests first. Whether they’re dodging APRA’s new performance tests, virtue signaling in the press, or ripping off their members. Currently:
- AustralianSuper is getting sued by ASIC for running duplicate accounts for their members and netting an additional $69m in fees over a 10yr period.
- HESTA is waging ideological warfare, needling corporate Australia on net zero goals and gender diversity.
- HostPlus is discontinuing its single sector property and infrastructure investments in October, just as APRA is ramping up its scrutiny of unlisted assets and their valuations. Nothing to see here, I’m sure.
This is to mention nothing of the repackaged, thrice sold, retail funds of the banks that are still hobbling around getting pinged by APRA’s performance test each year.
As Financial Advisers we have a horse in this race, given we help people develop independent, tailored investment strategies. Nevertheless, the vast majority of Australians depend on these institutions to grow their retirement savings and support their life after work. Politicking and virtue signaling won’t help grow their retirement balances. Also, passing APRA’s performance test won’t necessarily result in good investment returns either, when the incentives are skewed significantly towards “not failing” the benchmark. If the benchmark does poorly, so too will members.
The long-term returns of the major funds may look decent now after 20 years of easy money, but the next 20 years is a different challenge entirely. We believe that taking a more independent, tailored investment approach to retirement planning will be key to navigate a rapidly changing world, riddled with bureaucracy and inefficiencies, but also full of opportunity for those with an open mind.
About the author
PJ provides proactive, strategic advice to help you invest with confidence, structure your affairs intelligently, and get the most out of your unique circumstances. Contact us today and ask to speak with PJ.
Peter-James Cameron is a Sub-authorised Representative (#1266801 ) of Synectic Wealth Pty Ltd (ABN 24 615 317 194) which is a Corporate Authorised Representative (#1250871) of Alliance Wealth Pty Ltd (ABN 93 161 647 007 | AFSL 449221) www.centrepointalliance.com.au. Synectic Wealth Pty Ltd is the financial services division of Synectic. Learn more here.
This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.