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3 May 2024
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The Australian Government has asked the Productivity Commission to undertake an inquiry into the competitiveness and efficiency of Australia's superannuation system. The draft report was released on 29 May 2018.
These key points are taken from the Productivity Commission's website:
Any super fund that is guaranteed huge inflows of funds on a regular basis should always outperform a fund that has no such inflow, and of course has to allow for potential outflow. How easy to invest for the long term when you know that no matter what fresh money is coming in the door to handle liquidity issues! As for sponsoring football clubs etc how does this provide a retirement benefit for the member which I thought was the purpose of superannuation? We require SGC mandated funds other than the union funds to enable competition; perhaps even the Future Fund. Personally I would like to know more of the "alternatives" section of many mandated funds which are opaque to say the least and may look good in the current market but could cost some pain for future generations. Some weightings being as high as 30% of the fund.
"Unhealthy competition" - umm. I searched the go-to source of all human endeavour's knowledge (Wikipedia) and found no such term as it relates to economic activity. There were other references to "unhealthy competition" in regards to sociological outcomes (eg teams and workplaces), I will admit but no-one since Adam Smith until the Australian Government invented the term has anyone considered any economic competition as "unhealthy". Perhaps we can we bring back the Australian Wheat Board or TAA? I mean, really, how many airlines does one country need?
The idea of a "best in show" top 10 list of funds decided by an "expert" panel sounds absurd. If you put together a thousand different "expert" panels (expert in what exactly?), you'd likely end up with very close to a thousand different lists. I assume they'll essentially outsource to the research companies who already analyse and rate thousand of super funds. My many dealings with these agencies suggests they would take a very dim view of having the results of their work distilled down to a simplistic "top 10". The list would have to be constantly revised as performance, fees, market conditions constantly change. On top of that, what might be the "best" fund for someone might be totally inappropriate for someone else, depending on individual circumstances. I expect the panel will comprise the usual suspects: a few union bosses, a few company executives, some former politicians, Gonski and Peter Fitzsimons. I feel the chill winds of excessive government regulation blowing in. The irony is that ever-expanding regulation increases costs, complexity and bureaucracy, thereby often exacerbating, rather than solving problems (or else solving one, only to accidentally create another).
A positive of the PC report is the criticism of life-cycle products (“some foregoing higher returns by adjusting asset allocation as early as 30 years of age”). I have long been a critic of these products. They have the ability to “cost” members hundreds of thousands of dollars (but not hundreds and thousands). This insight by the PC will hopefully squash some aspects of the Cooper Review, whereby there was an inference that retirees should cash out from long-term investments to buy annuities. Whilst there is a need to protect against longevity risk there is, on the other hand, a benefit in maximising exposure to the best performing long-term assets. The PC report also said there should not be a MyRetirement default and hopefully this leads to healthy debate in this area.
The ATO has released all the superannuation rates and thresholds that will apply from 1 July 2024. Here's what’s changing and what’s not, and some key considerations and opportunities in the lead up to 30 June and beyond.
Life has radically shifted with my brain cancer, and I don’t know if it will ever be the same again. After decades of writing and a dozen years with Firstlinks, I still want to contribute, but exactly how and when I do that is unclear.
How useful are the retirement savings and spending targets put out by various groups such as ASFA? Not very, and it's reducing the ability of ordinary retirees to fully understand their retirement income options.
Australia will have 3.7 million more people in a decade's time, though the growth won't be evenly distributed. Over 85s will see the fastest growth, while the number of younger people will barely rise.
Investor disgust, consolidation, de-listings, price discounts, activist investors entering - it’s what typically happens at business cycle troughs, and it’s happening to LICs now. That may present a potential opportunity.
The $3 million super tax will capture retired, and soon to retire, public servants and politicians who are members of defined benefit superannuation schemes. Lobbying efforts for exemptions to the tax are intensifying.
Growth investors are using Buffett to justify buying blue chip stocks at almost any price. It’s a recipe for potential disaster, as investors in market darlings like CBA and Cochlear may be about to find out.
With Australia’s population moving through the fastest rate of growth since the 1950s, our cities and towns are naturally densifying. This is a look at the latest trends and how they will impact the property market.
We're nearing the end of the financial year and it's time for SMSFs and other super funds to make the most of the strategies available to them. Here's a 24-point checklist of the most important issues to address.
Nvidia has taken the world by storm and is now the third largest stock on the planet - larger than Meta, Amazon, and Alphabet. Here is the latest take on Nvidia from a fund manager who first invested in the company in 2016.
Despite being richer, surveyed measures of happiness have been flat to falling in Australia. Some suggest we should focus less on GDP and more on broader measures of wellbeing, though there are pros and cons to that approach.
In an era where growth companies dominate and the likes of Nvidia grab all of the attention, dividend paying stocks are flying under the radar. Some of these stocks offer compelling prospective returns.
After more than a decade of pitiful yields, bonds are back offering better prospects for income investors. What are the best ways to take advantage of the market inefficiencies in Australian fixed income?