Comments on: ‘KangaSupa’ a one-shot wonder for many policy ills

By: james mcdonald

james mcdonald — Tue, 27 Oct 2009 22:17:13 +0000

Risk has to be qualified by investment time scale. Some asset classes may yo-yo in the short or medium term, but have a strong tendency to trounce fixed-interest investments in the long term. That’s why decent super funds ask how many years you are from retirement, before recommending a mix of asset classes.

So, scaring 20-somethings about having their super in the “risky” share market would do them no favours. Does the proposed risk rating take account of investment time scales?

Also Chris, do you have any comment on my question above? How can the KangaSupa or Future fund honestly serve the investment objectives of superannuation workers while also serving a Rudd-Bank policy of supporting liquidity in vulnerable mortgage markets? Is that fair on the workers?

By: jossy

jossy — Tue, 27 Oct 2009 13:09:12 +0000

Debra: the employer contributions were in lieu of pay rises for the employees. The employers would still be paying that money but into their employees’ paychecks instead of to retail super funds (many who give all sorts of kickbacks to employers for all that money - of course that is a dirty secret that must never be mentioned.)

The simple explanation of why there is no public owned fund for all the nations wage slaves to choose nor is there ever likely to be is that public funds like medicare don’t pay kickbacks to political parties in the nature of political contributions. Whether it be $1,000 a head dinners or in direct cash payments to political campaigns. They also don’t fund attack ad campaigns against politicians and political parties that they don’t like.

Unfortunately our 2 party political system is rotten to the core and will likely stay that way.

By: chris joye

chris joye — Tue, 27 Oct 2009 04:47:43 +0000

Debra: hence the words “up to 9%”.

By: james mcdonald

james mcdonald — Tue, 27 Oct 2009 04:03:02 +0000

“Importantly, the government could then invest these savings into cash-starved areas of the economy such as highly-rated bank debt, corporate debt, and mortgage-backed securities, which have been inadvertent casualties of the GFC”

So, apart from trying to meet the investment objectives of fund holders, how many different policy interests should this fund serve?

By: billie

billie — Tue, 27 Oct 2009 03:57:12 +0000

The current superannuation contribution system assumes that the worker has one major employer who employs them for a number of years until they retire.
This ignores ‘sub-contractors’ who work for one contractor for year or most of the year.
This ignores workers engaged in casual, contract or part time work for a number of employers over a financial year. Although legislation is in place to allow workers their choice of super fund the mechanics of collecting the super contributions and sending them to the correct fund is complicated and time consuming for employers. When I asked an employment agency to pay my super contribution to my choice of super fund they were unwilling to roster me for teaching - despite the fact they regularly gave engineers the chance to contribute to their own SMSF.
In 1997 I contributed to 8 separate employer nominated super funds and the same situation occurred in 2005.
Then, of course at the end of the year you have to chose which fund to roll all your contributions into, not an easy choice as super funds are for workers who are currently working.
I support the idea of “Kanga-Supa”

By: Scott

Scott — Tue, 27 Oct 2009 03:55:17 +0000

Hi Christopher
I was wondering when someone would get around to mentioning that super funds should be treated like any other mutual fund or hedge fund…in that the risk adjusted return is a greater indicator of portfolio performance than just the return. Might make those industry funds look a bit dodgy though…
Also, in regards to the Future fund..I thought the reason why they stick mainly to fixed interest securities is that the fund was set up initially to fund public sector defined benefit super schemes, where they know their liability and can use bond immunization to protect their investment. They don’t really need to grow their investment (unlike the accrued benefit schemes the rest of us are on)

By: Debra Casey

Debra Casey — Tue, 27 Oct 2009 02:29:41 +0000

Does it not strike you as odd that although Australian governments since 1992 have forced workers to invest up to 9% of all their pre-tax earnings into a savings system known as ‘superannuation’, there is no government-managed solution (union-initiated super had actually been in place since 1986 via the awards)?

This is not true - Employees retained their wages and employers were made to pay the gradual increase to 9% over time - which was then supposed to be matched by the employee - show me someone who will now take the employee to task and have them also contribute to their superannuation fund - oh no - that’s right - let the employers contribute - they can afford it!!!