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Published 30 August 2012 15:15, Updated 31 August 2012 04:28
When’s the last time you checked your superannuation fund?
Every time I check my credit card balance online, I spy my super investment further down the screen and it seems to be doing reasonably well. It’s a self-managed fund I started when I was 18 years old with a pittance from my first waitressing job and an extra $500 I received as birthday money. I am a big fan of super and consider it to be one of this country’s policy triumphs.
Super research firm Chant West says Australian growth superannuation funds are producing modest returns, a positive given the unsteady global economy.
But in terms of consumer perception, super is in trouble.
Since the global financial crisis, super’s reputation has been hit in the eyes of the broader community. Some players in the super industry realise this but others don’t. I spoke at a meeting of super funds last year and one prominent member of the group asked me quizzically, “surely Australians understand that super is a far better investment long term than investing in property?”.
No they don’t understand that, sir. Super is tied to the market and Australians expect the global and local economies to be volatile for some time. Property prices didn’t drop sharply with the GFC and Australians across the country see the high prices and low vacancies in the rental market and the still high price of purchasing property. Sinking whatever savings you have into property and keeping personal debt to a minimum seems like a far safer investment than channelling more than the obligatory 9 per cent into super.
In the past, when we have questioned Australians directly about the long-lasting lessons learnt from the GFC, one of them was – question the value of super.
Lessons from the GFC? Don’t put all your money into super. Don’t have all your eggs in the one basket.
Woman 1: “I think it’s shaken a lot of people into thinking outside the square and not just having the norm. You know, ‘just chuck that to super, it’ll be right.’”
Woman 2: “Well, for so long though there was such a big thing, like Kochie used to always tell you that you should put all your money into super or whatever and that that was the way to go. I think [the GFC] has made that all change around. My husband lost 30 per cent of his super. I think he was very complacent and relied on the superannuation fund to move the money, which they didn’t.”
Those Australians who still understand the value of super have noticed an anti-super attitude develop amongst friends and colleagues.
The GFC probably reinforced the view that super is a bad thing which is a bad thing in itself.
People now see super as risky, which is a worry.
The time has come for a persuasive and large-scale campaign to spruik the benefits of super in a post-GFC environment. Otherwise super will started to be viewed less like an investment and more like game of chance.