In
a report that has sent shudders through
the nation, an ABC Report has spotlighted
that superannuation returns over the
past twelve years have been “woeful – shockingly
low, and far lower than has been generally
understood.”
How
does an average 2.8% per annum return
on super sound to you, as someone who
is saving for retirement along with the
rest of us?
This is the shocking figure that has
emerged from an analysis of the statistics
kept by the Australian Prudential Regulation
Authority going back as far as 1997,
and covering total assets and net contributions
in the superannuation industry.
What this means is that the money that
is deducted from our pay packets has
been lumped into super funds, but which
has then not only shown no growth, it
has actually lost value over time relative
to the cost of all other goods and services!
How is this possible?
One answer is that instead of the money
accumulating to provide for the dignified
retirement of workers, it has instead
been extracted at the outrageous
rate of $45 to $50 million per day
in fees
for those who manage the super funds
under their control. The super pot has grown dramatically,
with $1.2 trillion in funds under management.
While this sounds good, all it really
means is that those who manage the funds
withdraw ever-greater amounts, while
those who put the money in, are left
with below-inflation returns.
Instead of Australian workers developing
a future nest egg for retirement, the
fund managers withdraw the funds systematically
and consume them as an ongoing feast.
What does this mean for us as Australians?
There are a number of implications:
-
The current figure of 90% of Australians
retiring into conditions of financial
hardship is not about to change
- Our retirement ticket is being
clipped many times on the way through:
a. 15% by the government on monthly
contributions
b. The annual fees and other charges
by the fund managers
c. The taxes on withdrawal
d. The tax we will have to pay when
it the government has to increase the
amount
required to support future retirees.
There is little that I can say or do
that will change the sorry outcome
that will befall so many Australians
in their
retirement, having trusted that the
superannuation system would somehow
provide for them
in their golden years.
However, what I can do is to again alert
you to the importance of taking charge
of your own financial destiny, to ensure
you don’t place all your hopes
in the super basket, only to end up with
real losses after inflation, and in a
hopeless position as a result.
An investment property strategy is a
valuable addition to whatever funds you
will have available from your future
super, and is a successful strategy used
by tens of thousands of Australians just
like you.
If you would like to learn more and
discuss how McCarthy Group can assist
you, click
here.
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