ASIC warns on super fees

Cross-posted from Martin North’s DFA blog. ASIC today released a report into fee disclosure practices for super and managed investments.  The intention of the fee and cost disclosure requirements is to promote comparability of products. However, ASIC’s review of industry practices indicates that there is significant variation in the disclosure of fees and costs. A key


The great FOFA gouge

Cross-posted from Martin North’s DFA blog: Last week, the Future of Financial Advice regulations were tabled in Parliament, following the recently published Senatereview.  As currently incarnated they have the potential to drive a coach and horses through the original intentions of the FOFA reforms. Today we explore why this is so, and highlight some of the consequences for


Making superannuation sustainable (members)

By Leith van Onselen The Australian yesterday reported that the peak body representing the superannuation industry, the ­Association of Superannuation Funds of Australia (ASFA), has recommended that the government implement a lifetime cap on superannuation contributions – something lower than $2.5 million for a couple – as well as retention of the low-income superannuation contribution,


Australia’s superannuation system is failing

By Leith van Onselen Deloitte has released a new report, which argues that Australians need to begin contributing an extra 5.5% to 7.5% of their salary to super if they are to enjoy a comfortable retirement. From The AFR: Deloitte superannuation adviser Wayne Walker said it was important Australians not get too complacent about the


SMSFs get young

If you’ve ever wondered who it is that makes up MB’s 60k readers per week then here is your answer. From the AFR: The new trustee faces of Australia’s fastest growing superannuation sector, the $560 billion DIY super fund ­market, are younger, getting richer and willing to send more of their money offshore. According to statistics from the ­Australian Taxation Office, the age


More on the great super gouge

By Martin North, cross-posted from the Digital Finance Analytics Blog In an interesting speech yesterday Dr David Gruen Executive Director Macroeconomic Group presented some startling data to the assembled company at the CEDA State of the Nation 2014 event. Citing the Gratton Institute report he said “in 2013, Australian superannuation fees ranged from approximately 0.7


Gruen slams Australia’s exorbitant super fees

By Leith van Onselen Senior Australian Treasury official, Dr David Gruen, has today slammed Australia’s sky high superannuation fees, which cost members some $20 billion last year and are around three times greater than those prevailing in the United Kingdom. From Business Spectator: Australians spend around $20 billion annually on superannuation fees, which equates to


Amateurs continue to beat pros at super

By Chris Becker The self-managed super sector continues to outperform the so-called “pros”, according to NAB with average yearly returns (after fees) hovering near 7% compared to 4% From SMSF Advisor Online: A NAB analysis has demonstrated SMSFs outperformed APRA-regulated funds between 2005 and 2012. A Rice Warner analysis of APRA and ATO statistics commissioned


Everything that’s wrong with super in 900 words

By Leith van Onselen Do yourself a favour and head over to Eureka Street to read Brian Toohey’s latest article, Super’s Evil Empire on Shaky Ground. In less than 900 words, Toohey – a long-time advocate of equitable retirement policy and inter-generational fairness – surgically dissects everything that’s wrong with Australia’s compulsory superannuation system, including how


SMSF property investment surges

By Leith van Onselen The AFR is running a couple of articles today on the strong rise of self-managed super fund (SMSF) investment in property, which has exploded since the former Howard Government legislated in 2006 to allow SMSFs to borrow money to purchase assets under limited recourse conditions (i.e. in the event of borrower


The super gouge needs fixing

By Leith van Onselen The AFR’s Agnes King has written a ripper article highlighting the egregious nature of Australia’s superannuation system, which has increasingly become a mechanism for richer older people to avoid paying tax, rather than a genuine means for Australians to pay for their own retirement and avoid drawing on the Aged Pension:


Keating: slug workers more to pay for ageing?

By Leith van Onselen Former Prime Minister, Paul Keating, seems to be losing his marbles in his old age, last night recommending that Australian workers get slugged another levy to cover “geriatric” care for people aged 80-plus: “We have to have, I believe, a commonwealth insurance scheme for the 80-100s with a calibrated, precise product,


Paul Keating’s super system is failing

By Leith van Onselen The AFR’s David Bassanese has written a good article today on the ever-expanding black hole that is Australia’s compulsory superannuation system, which is failing on almost every count and sucking the Budget dry: It is time Australian policymakers admitted their mistakes and faced facts: our unique system of privately run superannuation


Grattan, Kohler attack super gouge

Over the weekend, the Grattan Institute released a new report into super gouging. From the AFR: Superannuation funds should be required to submit to a regular official auction to become the nation’s “default” super provider under a plan to cut Australia’s high super costs. The recommendation is one of two by the Grattan Institute in


Hockey palms super reform to second term

By Leith van Onselen Being a Budget commentator is never dull. After expending significant effort this morning slamming the Government for failing to include Australia’s egregious superannuation concessions in its “war on entitlements”, Treasurer Joe Hockey has now flagged changes to superannuation and an increase in the preservation age, which will be taken to the


Kohler slams FoFA tweaks

Alan Kohler is in good form today demanding the Coalition dump its entire FoFa reform platform. He argues: The eight changes proposed by the Coalition, presumably written by the banks, are: 1. Allowing commissions to be paid for the provision of “general advice”, as opposed to personal advice. 2. Making the annual fee disclosure statement apply


Industry rent seeker wants 15% compulsory super

By Leith van Onselen Perpetual chief executive, Geoff Lloyd, has today backed calls for the superannuation guarantee (compulsory superannuation) to be raised to 15% from 9% currently, citing that it would help bolster Australian incomes in retirement. From The AFR: “I’d like to think it can get to 15 per cent. Our politicians are getting


Super rent-seekers demand more pork

By Leith van Onselen The Australian superannuation industry appears to be lobbying for the indexation of superannuation contribution limits, which would enable contributions to rise in relation to wages growth. From the AFR: …after taking over the Howard super model, in 2009, [Labor] halved the standard tax concessional contribution entitlement to the current $25,000 a


Superannuation balances hit $1.8 trillion

Cross-posted from DFA Blog APRA today released its quarterly superannuation statistics. They report that total estimated assets, which include the assets of self-managed superannuation funds and the balance of life office statutory funds, rose to $1.8 trillion at 31 December 2013.  Read about superannuation in our series of posts, The Superannuation Story. Self managed superannuation


Is there demand for Australian annuities?

By Martin North, cross-posted from the Digital Finance Analytics Blog Today we start to look at annuities in Australia. This follows on from our look at the UK’s Annuity Mess recently. In Australia the annuity market appears undeveloped, but in the light of regulatory change, rising superannuation balances and self-managed superannuation, we review the likely


The superannuation story, part 5

By Martin North. Cross Posted from Digital Finance Analytics Blog In previous posts we looked at aspects of superannuation in Australia, from the perspective of investment fund performance, fees, consumer attitudes to super and self-managed super. Today we look at the role of investment platforms, an element in the superannuation value chain which is often


Superannuation exposes entitlements hypocrisy

By Leith van Onselen Deloitte-Access Economics’ Chris Richardson is the latest to jump on the “reform superannuation” bandwagon, arguing today that super concessions will cost the Government $32 billion in forgone revenue this year, with the majority of benefits going to the wealthy. From the AFR: Deloitte Access Economics partner Chris Richardson said while superannuation


SMSFs ramp up residential property exposures

Westpac’s Elliot Clarke has produced an interesting note today on the increased purchasing by Self-Managed Superannuation Funds (SMSFs) of Australian residential property: Superannuation is the principal form of savings for Australian households outside of the family home. As at September 2013, household superannuation assets stood at just over of $2trn – $1.7trn in super funds


The superannuation story, part 4

By Martin North. Cross Posted from Digital Finance Analytics Blog Continuing our series on superannuation, today we look at Self Managed Super Funds (SMSFs). Growth in SMSFs is probably the most significant event in the superannuation industry, leading not unsurprisingly for calls for greater regulation or a clamp-down from many industry players. We will be


The superannuation story, part 3

By Martin North. Cross Posted from Digital Finance Analytics Blog Continuing our series on Superannuation, after looking at performance and fees, today we look at consumer attitudes to Superannuation, based on the DFA household surveys. We collect data on an ongoing basis, and maintain a statistically robust sample. We include a number of specific questions


The superannuation story, part 2

By Martin North. Cross Posted from Digital Finance Analytics Blog Last week, we started our series on Superannuation, and showed that performance varied by type of fund, and across funds in an unpredictable way. Today we look at the industry from a consumer perspective. This is important because the overall returns as reported by APRA