Tuesday, 29 July 2008

Australians Angry as Superannuation Funds Tank

I have been reading How to Cope with the Super Blowout. In Australia, like America, there is a forced savings policy whereby employers must give 9 per cent of income into a retirement fund. Most Australians it seems have no idea what the fund manager does with this money. They just seem to have faith in the government. Around about now annual reports are arriving in the mail telling Australians that in the last year their super fund has gone down in value by 10 to 20 per cent thanks to global financial uncertainty.

As the comments section suggests, many are not happy. Some are blaming the Rudd Government who went into power just as things started to go bad. This doesn't necessarily mean that Rudd is guilty of anything. If I walk into the house just before the vase falls and breaks, who says the vase wouldn't have fallen if I hadn't walked into the house? Some are saying buy gold. No doubt, gold has done well recently, but who says it will continue to do well. Some say buy property because it only ever goes up. This is just false. The super fund mangers are telling everyone to relax and to look at the long term.

Although I am a fan of investing my money in super, I do not like the arrogant and paternalistic policy whereby the Government thinks it is a better money manager than the average person and therefore forces a portion of income to go into investment they deem are superior. Not everyone wants to be invested in shares and long term increases in share value are not guaranteed. If they were, these gains would be arbitraged away. In my opinion, forced savings or superannuation should be done away with altogether so that regular Australians can do what they want with their money. Some say that with SMSF (self-managed super funds) individual do have control. But this is not total control. You cannot purchase a Coke with money in your SMSF.

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