A SUPER SHOCK

Several months ago on the program I posed a test. I said: Ask your partner. What’s the name of our super management firm? I said some people don’t even know how much is in their super fund. What percentage is in shares or in bonds and other investments. Some change jobs and don’t know if their super carried with them. And some companies take advantage of that ignorance and either don’t transfer it or illegally don’t contribute their share. And all along the way the fund managers take their whack.

My comments were prompted by the collapse of Opes Prime.

Superannuation is in the news again today for several reasons. It’s the end of the financial year and people are starting to get the news that it’s been a shocker of a year for super fund investors.

The collapse of the stock market and especially the battering taken by the supposedly blue chip stocks like the major banks has pushed super returns deep into the red.

Most funds will show losses of more than 6% for the year. And that’s a big hit if you were planning on retiring this year or even legally cashing in ten per cent of your fund tax free while still working.

One superannuation expert says the majority of Australians are totally unprepared for negative returns in their super funds.

David Whiteley from ISN, the Industry Super Network says ‘just one in 10 people are aware that there will be a decrease in their super balance’.

That makes a mockery of the old saying that ‘ignorance is bliss’. Especially when it comes to your retirement money.

Several months ago there was a survey that claimed 75% of Australians were in favour of their compulsory superannuation being increased from nine per cent to 12 per cent  over the next four years.

But when you looked at the fine print you discovered that the survey was conducted for The Australian Institute of Superannuation Trustees.

I know I sound like I am nagging but as I have said before: Do you even read the annual report to see which what shares your investments are in? How many eggs do you have in how many baskets? How much does your fund take in annual management fees? Do you have any say in which companies your broker invests your money in?

Do you even know exactly how much you would get if you cashed out now?

Governments want you to have enough invested in super to retire on it. They don’t want to pay you a pension –even though you may have paid taxes for fifty years. They can’t protect you from stock market slumps.

But they can make the funds more transparent, more accountable, and make it easier for you to change funds without penalty if you are not happy.

After all, it’s your money, Ralph.

Thursday, July 3, 2008

© Copyright Derryn Hinch 2008