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3 July 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.
Two commonly asked questions are: 'How much do I need to retire' and 'How much can I afford to spend in retirement'? This is a guide to help you come up with your own numbers to suit your goals and needs.
There seems to be more confusion than clarity about the mechanics of how the new $3 million super tax is supposed to work. Here is an attempt to answer some of the questions from my previous work on the issue.
Washington H. Soul Pattinson is an ASX top 50 stock with one of the best investment track records this country has seen. Yet, most Australians haven’t heard of it, and the company seems to prefer it that way.
We are often quoted life expectancy at birth but what matters most is how long we should live as we grow older. It is surprising how short this can be for people born last century, so make the most of it.
A new report suggests Australian housing is twice as expensive as that of the US and UK on a price-to-income basis. It also reveals that it’s cheaper to live in New York than most of our capital cities.
Here are 10 rules for staying happy and sharp as we age, including socialise a lot, never retire, learn a demanding skill, practice gratitude, play video games (specific ones), and be sure to reminisce.
The best way to lose money in markets is to chase the latest stock fad. Conversely, the best way to build wealth is by pursuing a timeless investment strategy that won’t be swayed by short-term market gyrations.
Australian consumers have held up remarkably well amid rising interest rates and inflation. Yet, there are increasing signs that this is turning, and the weakness in consumer spending may last years, not months.
The nine lessons include there is always a cycle, the crowd gets it wrong at extremes, what you pay for an investment matters a lot, markets don’t learn, and you need to know yourself to be a good investor.
It's that time of year when investors sell underperforming stocks at a loss to offset capital gains from profitable investments. This tax-loss selling is creating opportunities in three quality ASX stocks.
Across the globe, leaders are concerned about the fallout from declining birth rates and shrinking populations. Australia, though attractive to migrants, mirrors global birth rate declines, and faces its own challenges.
Australians are paying almost two billion dollars in credit and debit card fees each year and the RBA wil now probe the whole payment system. What changes are needed to ensure the system is fair and transparent?
Many Australians neglect key retirement planning tools. Investment bonds are increasingly valuable as they facilitate intergenerational wealth transfer and offer strategic tax advantages, thereby enhancing financial security.