Superannuation, the ultimate government cash cow?

[PZ99]

I wouldn't pay too much attention to anything regarding super at present.

When this destruction of wealth has run its course and we have more than a trillion in govt debt the first thing a future govt will target is your super and how much, or when, or even if you can get your money out.

This thread will probably become a sticky before Christmas (if it isn't abolished by then)

 

[InsvestoBoy]

The strong investment returns on illiquid assets is, in fact, referred to as the ‘illiquidity premium’, a reward for the risk funds are willing to adopt when they buy these lumpy assets that are hard to sell.

While I believe there is a real illiquidity premium, I also think it's arguable whether these assets have even actually outperformed or are simply marked to fantasy values because they are unlisted the fund managers can get away with dodginess. Same problem in Private Equity.

Look at this

https://www.smh.com.au/business/ban...value-of-unlisted-assets-20200324-p54des.html

The Age and The Sydney Morning Herald can confirm Unisuper, the $85 billion fund for university workers, has cut the value of its holdings in unlisted infrastructure by 6 per cent, and its unlisted property holdings by 10 per cent.

Unisuper's unlisted infrastructure investments include the Brisbane and Adelaide airports. Among its property holdings are the Marrickville Metro Shopping Centre in Sydney and Malvern Central Shopping Centre in Melbourne.

It comes after AustralianSuper, the nation's biggest super fund, told members it had cut the value of the unlisted assets on its books by 7.5 per cent

See, a complete mark to fantasy joke.

Listed infra funds dropped by a lot more than 6 - 10%. Sydney Airport certainly dropped by a lot more than 6%, so how can they justify marking Brisbane and Adelaide airports only down -6%?

I am sure plenty of listed fund managers would have liked to mark their assets down only 7.5% in March

 

[sptrawler]

While I believe there is a real illiquidity premium, I also think it's arguable whether these assets have even actually outperformed or are simply marked to fantasy values because they are unlisted the fund managers can get away with dodginess. Same problem in Private Equity.

Look at this

https://www.smh.com.au/business/ban...value-of-unlisted-assets-20200324-p54des.html



See, a complete mark to fantasy joke.

Listed infra funds dropped by a lot more than 6 - 10%. Sydney Airport certainly dropped by a lot more than 6%, so how can they justify marking Brisbane and Adelaide airports only down -6%?

I am sure plenty of listed fund managers would have liked to mark their assets down only 7.5% in March

In reality it isn't much different than what the Banks were done for, "fees for no service", if a fund is illiquid with regard to its minimum cash requirement, it isn't providing the service it is being paid for. IMO
If a SMSF hasn't got sufficient liquid funds., to meet its cash flow requirements, the ATO will come down heavy on them.
A friend and I were talking on the weekend, he is 64 and still working, changed his super balance to cash a few weeks ago.
He is thinking of transferring the balance to another, larger fund.

 

[Dona Ferentes]

From a weekend media report

"The structure of many funds will now be put to the blowtorch: the definition of “balanced” funds, which includes a large portion of growth assets, will be tested, the poor transparency of unlisted assets in global infrastructure will be tested, the skewed demographics where some funds have too many young workers (Cbus, Hostplus, REST) or some have too many older members (UniSuper) will be tested.

Publicly, big funds have already dismissed notions that liquidity will be tested, just as they have presented a face of unity on the government’s economic crisis package. But divisions will reach breaking point if the government does not do more to ensure the smooth functioning of the scheme. Indeed, industry analysts already warn that industry funds would be among the first to “freeze” withdrawals if the situation deteriorates."

The retail and industry funds will find a way to cope with withdrawals. It's just that the returns will be fudged = be diminished (implying those continuing to stay in will subsidise the nimble.)

 

[Dona Ferentes]

Above quote was from
https://www.theaustralian.com.au/bu...s/news-story/79fe278c666572f6a47979a3b7f6297f

PS. News Ltd has lifted paywall.

 

[sptrawler]

I see some people are starting to say the super system is just a big Ponzi scheme, what some on here have been saying for years.

 

[Humid]

I see some people are starting to say the super system is just a big Ponzi scheme, what some on here have been saying for years.

Just funds or Self managed as well?

 

[sptrawler]

Just funds or Self managed as well?

SMSFs are closely watched by the ATO, I dont know about anyone else, but my fund is always 40% cash at worst.
The problem with large super funds IMO, is the fact that for the last 20years money has been pouring in every payday and not many have been pulling a sizable pension.
Now all of a sudden there is a call for some serious money and many are found wanting.
This is the very reason I started my SMSF, how many times in the past, have people lost their life savings through some dodgy financial institution the latest was Storm from memory.
I dont think I can do a better job of investing than mainstream super funds, but at least I know exactly where my money is and Im the only one who can do anything with it.
If I lose it, it is my fault, not some third party who doesnt give a ratz ar$e about me.

 

[Humid]

I imagine certain section of the work force may draw on their super more than others
Like hospitality more so than construction but then it depends on how deep this $hitstorm goes

 

[sptrawler]

I imagine certain section of the work force may draw on their super more than others
Like hospitality more so than construction but then it depends on how deep this $hitstorm goes

The one thing from all this that is certain, is that it is like musical chairs, when the music stops there will be a lot less chairs to sit on.
I think tradies are fine Humid, you guys like my son are always required, even engineers can't do the hands on stuff.
Well most can't, I know a couple who started as apprentices, became engineers and ended up CEO's.
Amasing guys who ended up hard arsed bosses, but never forgot where they came from and didn't take BS from the floor level at meetings well.

 

[Humid]

The one thing from all this that is certain, is that it is like musical chairs, when the music stops there will be a lot less chairs to sit on.
I think tradies are fine Humid, you guys like my son are always required, even engineers can't do the hands on stuff.
Well most can't, I know a couple who started as apprentices, became engineers and ended up CEO's.
Amasing guys who ended up hard arsed bosses, but never forgot where they came from and didn't take BS from the floor level at meetings well.

I think the whole affair is a wake up call for the world....particularly the west

 

[sptrawler]

I think the whole affair is a wake up call for the world....particularly the west

It certainly is, IMO Trump lit the fuse on the Lima Agreement, where the first World countries agreed to send a lot of manufacturing to the third World Countries so they could lift out of poverty and pay their way.
The problem was China being a 'regulated' Country, saw the opportunity and grabbed it,"we will do it for FA just build your factories here.
Well that has got completely out of control, reverse engineer everything, don't respect any intellectual knowledge or patents.
The problem with Trump is, he hasn't played the game, doesn't need the money so has given the multi nationals and China the 'bird'. lol
If the first World Countries don't get their $hit together, we will all work for China and they think we all look the same.

 

[Humid]

Australia is a Ferrari driven by Mr Magog unfortunately
We need major changes

 

[sptrawler]

Australia is a Ferrari driven by Mr Magog unfortunately
We need major changes

You really do need to take the blinkers of IMO, neither party are bad, it is just a decission on which has the best policies at the time. Then vote accordingly.
It is a bit like investing in shares, just because a company did well under certain management, doesnt mean it will perform as well under a different management.

 

[Humid]

You really do need to take the blinkers of IMO, neither party are bad, it is just a decission on which has the best policies at the time. Then vote accordingly.
It is a bit like investing in shares, just because a company did well under certain management, doesnt mean it will perform as well under a different management.

No one in particular attacks working people
Constantly
The integrity bill is the latest attack
The one and only reason I vote labor

You really do need to take the blinkers of IMO, neither party are bad, it is just a decission on which has the best policies at the time. Then vote accordingly.
It is a bit like investing in shares, just because a company did well under certain management, doesnt mean it will perform as well under a different management.

No one in particular constantly attacks blue collar workers
Integrity bill ring a bell

 

[Humid]

https://amp.macrobusiness.com.au/?u...au/2020/04/a-new-superannuation-rort-emerges/

 

[sptrawler]

https://amp.macrobusiness.com.au/?u...au/2020/04/a-new-superannuation-rort-emerges/

Good article Humid, the only thing it forgot to mention about the Costello TTR so called rort, that was stopped in 2017. Was that in that period of time Labor had two terms in office and didnt change it, macro business has some good articles, but it is a shame they have to bias everything.
By the way I retired too young, to be able to use a TTR, not that I liked the idea anyway.
The idea of putting in $10k and withdrawing it, I think it would be more trouble than it was worth.
Just my opinion.

 

[Humid]

Good article Humid, the only thing it forgot to mention about the Costello TTR so called rort, that was stopped in 2017. Was that in that period of time Labor had two terms in office and didnt change it, macro business has some good articles, but it is a shame they have to bias everything.
By the way I retired too young, to be able to use a TTR, not that I liked the idea anyway.
The idea of putting in $10k and withdrawing it, I think it would be more trouble than it was worth.
Just my opinion.

In them 2terms the same could be said about franking credits which your still frothing at the mouth about

 

[sptrawler]

In them 2terms the same could be said about franking credits which your still frothing at the mouth about

Like I said several times, but you seem to ignore, if you take them of me take them off everyone.
But obviously you will only understand if and when it affects you.
Here is me and probably many others,64 living off my savings and franking credits being criticized, when if I had pissed it against a wall, my handouts would be doubling and you would be praising me.
Australia, you know your standing in it.

 

[Humid]

If it affects me