I did say “a horrible feeling” - so not ever claiming rigorously established fact - but it was based in part on the quoted text:
Eleven of the 13 [funds that failed]
In other words, if a fund generates bad PR then merge it out of existence in order to make the bad PR go away, rather than say, improve it - or even stand their ground.
and
which is how the system is supposed to work
(admittedly only according to the ABC)
It would be difficult to have real, long-term data as these are all relatively recent changes - unless other countries have tried the same thing.
Undoubtedly the “economies of scale” argument has merit. However it is not always as simple as that e.g. a fund manager does the research but it can apply that research to any individual fund that it operates. This is what happens in the Managed Funds sector, which is not all that different from (public) Super Funds. Indeed it wouldn’t surprise me if there were substantial overlap in investments and research where the funds are all under the same fund manager.
We care, mostly when it comes to getting our hands on our super. Or in recent times when Government decides to let us spend it before time.
Cynically many of those who dipped into their super appear to have had the least in savings. Likely also putting the greater stress on the Industry Super Funds. These have progressively increased their market share through the addition of numbers of members rather than the wealth brought by new members, IMO.
A more serious concern may be the capacity of the Australian investment markets to absorb increased demand from super funds.
Measured against inflation the true returns (effective purchasing power) vary, often by large percentages. Also noting that past performance does not assure future performance. Hence accumulated and future returns are affected by when one is born, earning capacity over a lifetime and year of retirement. For those recently retired, with falling investment returns and rapidly increasing costs (inflation) how will it work out? Perhaps not so well given many are now expected to spend another 20 years living substantially off our super.
I think we care (we who take an interest in politics and policy etc.) but it is less clear that the unwashed masses are very interested, particularly when it is something abstract that won’t be in our hands for decades.
I find it at least a little amusing that every time the government passes laws to increase disclosure, entities find ways to make the information so mind-numbingly boring, long-winded, tedious and opaque that for most people their eyes glaze over and they scroll on.
In my opinion this is a bad idea and should never be allowed, excepting possibly for someone with a terminal illness and with only a moderate amount of time remaining.
Likewise I think superannuation law should prevent people taking lump sums out of their super at retirement except under limited circumstances.
Definitely. That is something that concerns me too. It could easily be that with too many super dollars chasing assets, either asset prices rise and hence yields fall or super fund managers are drawn to riskier or less desirable assets.
I have no problem with investing in overseas markets but I don’t know whether there are any special considerations with Australian super fund managers that would impact on such a decision.
Which is an added complication for super fund managers in respect of the actual changes being discussed i.e. once a super account moves from the accumulation phase to the annuity phase.
