Superannuation Scam

[old man emu]

Good, bad or indifferent, Australian workers benefit from having money in superannuation funds. The money might only be that compulsorily contributed by employers, or it could also include their own contributions. 

 

Considering the size of the Australian workforce, and the amount paid in wages and salaries, the amount of money going into superannuation annually is incredible. The problem for fund managers is how to use that money to cover administration costs and to keep head of inflation. The obvious answer is to invest the money. But invest in what? And here is the source of what I am calling a scam.

 

It was announced during the meeting between Albo and Trump that within a few years aroung one trillion dollars from Australian's superannuation would be invested in the USA. Why should our money go to bolster the economy of another country? There's lots of income-producing things that we have not implemented simply becasue the start-up money wasn't there. We just signed a deal with the USA to supply the metals required to make electonics etc. Why not use that superannuation money to establish a refining industry.

 

Why are raw iron ore and coal exported for steel production elsewhere when it could be value added here? The same holds for our wool, and cotton and other agricultural products. What about re-establishing petroleum refining so that we can lift our storage capacity to beyond 25 days?

 

Charity begins at home, so why don't we start being charitable to our kids and grandkids by keeping the money our efforts have created here in Australia?

[facthunter]

They are already trying to value Add. Deserts are not good places to grow Cotton. Traditional steel making is Carbon intensive. We are a dry Country, sparsely settled.  There's so much super money It would distort the Local Market IF not spread overseas. Nev

[octave]

I retired early (57), so we are living on our super.  For about the last 30 years, we invested in  Ethical Investments Super Fund because the investment portfolio broadly aligns with our ethics.  Within this investment fund, you can choose among other things Australian shares or Overseas shares.   We always stick to Australian shares, although overseas shares generally perform better. In the last financial year, Australian Shares in my super earned 10.7% whereas International shares earned 16% (but a little riskier)   We prefer to invest in our own country so we are proactive and choose Australian rather than International even though we could probably make more with international.

 

I would urge people to be proactive and select shares in areas that you support.  It is extremely easy to change your super mix.

[facthunter]

Bond and Skaise were Australian shares. Not necessarily ethical. There's plenty of other shonky ones that I won't name for obvious reasons.  Nev

[octave]

Just now, facthunter said:

Bond and Skaise were Australian shares. Not necessarily ethical. There's plenty of other shonky ones that I won't name for obvious reasons

I know what shares are in my super. When it says Australian shares, that is Australian plus meeting the fund's ethics. Amongst other things, no fossil fuels or anything involving land clearing.  Many investments in renewables and community projects. So no, not just any Australian shares. 

[facthunter]

You HAVE to do a lot of research. The stock markets are USED /manipulated by some slick operators. Insider trading is RIFE. You are only getting the BIT Left over. . The Market runs on FEAR & Greed. Nev

[octave]

Just now, facthunter said:

You HAVE to do a lot of research.

I totally agree. I have been doing my research for the last 35 years.   Independent audits indicate that its portfolio broadly aligns with my ethics.  I suspect that many people don't actively choose or manage their super.    

[red750]

Albo buying favour with the orange Chump.

[spacesailor]

Singapore , uses some of your ' superannuation ' to pay for your family home .  ( HOME DEPOSIT ) .

Sounds good to me .

But ! .

Other people gambling with your 'superannuation ' doesn't fit my ethics .

spacesailor

[onetrack]

SWMBO has her super invested with Telstra Super, because she worked for them for a while. The return on this fund is impressive, more than 7% on average, over the last 20 years.That period includes the disastrous GFC and the pandemic period, as well as a couple of other financial shocks. Interestingly, Telstra Super have a fairly even balance of Australian and U.S. shareholdings. The managers continually revise their investments.

The major thing with Telstra Super is that profits are returned to Super Fund holders, not to already-wealthy private shareholders, as many Super Funds do.

Telstra Super has won awards as the Fund with the best performance for the last 18 years. SWMBO draws out 5% a year (the minimum) and the level of funds she's got, just keeps on increasing, despite the drawdown.

[octave]

26 minutes ago, spacesailor said:

Other people gambling with your 'superannuation ' doesn't fit my ethics .

This is why you have to take an active interest in your super

 

11 minutes ago, onetrack said:

The return on this fund is impressive, more than 7% on average, over the last 20 years

 

Yep, that is a pretty good return. Mine was 10.7% but that was last year, over 20 years, it was more like 6%.  The year we retired was a cracking 19%.  We would take our monthly payment, and the balance kept going up.  This was never likely to continue in the long term. Then came the Covid crash, although this seems to have been made up for since.   My worry now is the coming Trump crash.  We observe closely to see if/when we should pull out our super and put it in term deposits.

[red750]

I no longer have super. I used to be with Care Super because I worked in a call centre handling Care Super members and employees for eight years. until I retired in 2010. Their return was pretty good. Here are the figures from their website.

 

[red750]

Another Care table, by asset class.

 

[onetrack]

Red750, what happened for you to no longer have any super, when you originally had it? I thought it was supposed to last your average lifetime?

[red750]

My original super, accrued in the 30 years I was in the bank, before Paul Keatings compulsory super, was called Officers Provident Fund, basically all member voluntary, and not preserved. When my bank was taken over, euphemistically called a merger, the new entity did not need two lots of staff, and many of the staff of the minnow (my bank), were retrenched. Lots of staff looking for new jobs that didn't exist. Because my wife was working, she earned enough to tip our combined income over the threshhold for unemployment benefits, so social security deemed I was not entitled to the dole. I was educating three kids, two in secondary college. Soc Sec advised that I should draw down this unpreserved money to live on. Worried that my mortgage could be foreclosed, we also paid it off from this fund.

 

So when I got a job and could pay super under Keatings scheme, I was virtually starting from scratch. My salary was a few thousand less than I was earning in the bank, and the 3% employer contributions were not much. So when I retired (under duress) in 2010, II didn't have a lot accrued. I have now been retired for 15 years, and what I had didn't last long, about 5 years. I have relied entirely on the pension since about 2016. Since my wife died in 2022, I have managed to clear all debt and accrue a couple of thousand in savings. There won't be much more than the house to leave to the kids.

[octave]

I started my working life in the RAAF. The equivalent of super was DFRDB  (death, something retirement -can't quite remember what it stood for.)    As superannuation, it was a bit sh1t.  It was great if you stayed in for 20 years, but short of that, you pretty much got back exactly what YOU put in. When I left in 1990, I got an enormous amount of $14000.   Just as I was leaving, the DFRDB system was changing because compulsory superannuation was introduced, and the military equivalent was too inferior. I think you could choose to stay with the old system (if your 20 years are nearly up)  or go with the new one, which would be better in the long run.

 

My wife and I pretty much dropped out and sold our expensive Blue Mountains house, and built our own house on 44 acres of bush.  We lived on part-time work, so we were not accruing super.   I assumed we would have to work until we dropped.  Gradually, we got sucked back into more or less full-time work.  We moved to Melbourne, and my wife got a reasonably well-paying job.   About 10 years ago, we decided that we should think about retiring early, but we had sod all super. My wife did a course and learned the ins and outs of superannuation.  At the time, we still owned our house interstate, and we were renting in Melbourne. My wife did all the  "salary sacrifice" that was legally allowed (at the time $25000 a year).   We bought an extremely cheap unit in Geelong and sold our house, and put the money into super.  About 6 years ago, my wife retired at 57. I had been teaching music, but I was phasing out until I gave it away completely. We pretty much live on the same amount as the aged pension, but we can also draw extra for holidays and other treats. We are hoping to get to pension age with a buffer for treats and holidays etc.

We are hoping to have a sum of money left when we reach pension age for the holidays and treats etc.            We had always assumed that we had missed the boat superannuation-wise wise but we were able to catch up at least enough to have a pleasant life.  

[old man emu]

Intersting coments about personal experiences,

 

BUT

 

my point relates to the money that Australians aree putting into superannuation is not being invested in things to improve Australia's future. It's going to line the pockets of foreigners by allowing them to invest in money-making projects and returning a pittance on the capital our sweat is producing.

[octave]

18 minutes ago, old man emu said:

my point relates to the money that Australians aree putting into superannuation is not being invested in things to improve Australia's future.

 If your money is invested overseas, doesn't the money you invest plus interest end up back in Australia when you take your money? 

 

Edited yesterday at 10:41 AM by octave

[onetrack]

The DFRDB stood for "Defence Force Retirement and Death Benefits Scheme". It was certainly a very poor form of superannuation. But the big Life Assurance companies ran worse schemes.

 

My father started Life Assurance accounts for the older brother and myself in the early 1960's, and we started paying into them as we got older and started out in business together. But the return on those LA schemes was about 1%, while the Life Assurance companies made millions in profits from our monies, and paid all those profits to wealthy Life Assurance Co shareholders!

 

We found we could borrow against these policies, so during some hard times we both borrowed small amounts against the policies, to keep our business operational. But the interest rate we were charged was something like 8%, and because we took our eyes off the policies, it wasn't too many years before we realised the policies were essentially now worthless, because the loans and interest had eaten up the (relatively small) value of the policies!

 

So we cancelled the policies and extracted the few miserable dollars left, and never bought any Life Assurance (or Life Insurance) policies ever again!

 

[old man emu]

10 hours ago, octave said:

 If your money is invested overseas, doesn't the money you invest plus interest end up back in Australia when you take your money? 

 

Yes, but over the years that your money has been invested overseas, it has not been used to develop Australia. 

[octave]

2 minutes ago, old man emu said:

Yes, but over the years that your money has been invested overseas, it has not been used to develop Australia.

Yes, I get that, and that is why I chose super that invest in Australia.  I am thinking, though that whether investing overseas is good or bad must not be a clear-cut thing.   I bought a bunch of Tesla shares when they were dirt cheap and when I sold them, they were worth 8 times the original investment.    To my mind (and I am happy to be corrected), on the downside, the money I used to buy the shares was taken out of circulation in Australia. On the upside, that money is now back in the Australian economy, some of it in term deposits and some being spent here in Australia.

 

OME, I am mostly in agreement with your point, I am just saying it is not black and white. The other issue is, and I can only speak of my super fund, you can choose to invest in only Australian shares or international shares or you can choose a mix of those shares by percentage.  

[old man emu]

4 minutes ago, octave said:

I can only speak of my super fund

Therein lies the rub! You might have been astute enough to take a lot of control of your superannuation investment, but the vast majority of Australians don't even know which organisation is running the fund their employers are using. I paid into a fund for near on 30 years. I don't know who ran it, or where the money was invested. How much of my money contributed to the betterment of Australia?

[octave]

I think it was 2005 when you could choose your own super, and not have your employer choose for you. I think people may have gotten into the habit of not thinking about their super.  

[octave]

Just two further points that just occurred to me.

 

For the investor, spreading money between this country and overseas spreads the risk. If all your money is invested in Australia and the Australian economy goes bad you have all of your eggs in one basket.

 

Whilst we invest money in foreign economies, surely foreign economies invest money in our economy.   

[Marty_d]

It's where the money ends up that counts, IMHO.

Your money may be used to fund projects overseas, but if the fund makes a profit from those endeavours then the capital plus profit ends up in Australia.

You then draw your super and spend it locally, benefitting the Australian economy both by adding the wealth sourced from overseas, and by reducing the burden on the taxpayer by reducing or eliminating your use of Age Pension.