Given the exposure of the nation's superannuation funds to the market, a serious economic crash could wipe out significant value from many people's super and hence retirement income. (Not everyone of course, but certainly a very large number of people currently contributing to super, especially those with a higher-yielding mix.) Do forward government budget forecasts take this into account when estimating future welfare commitments? Is this a realistic concern and, if so, what would be the longer-term consequences? Massive tax hikes to fund the pension? Large reductions in the level of the pension? Some sort of emergency wealth confiscation?
The marked imbalance of super portfolios towards the sharemarket is what prompted policy makers to loosen of rules for super investment to property and other non-paper assests (property, art, collectibles, memorabilia etc). Formerly it was thought a mix of cash, bonds and equities was balanced enough. The GFC showed how risky these were. I think they're aware of the pending risks... but they're pretty much boxed themselves into a corner with their own rules.
1) Super-funds would panic sell. 2) The cartel would buy at the bottom 3) Stock would go up 4) Super-funds will buy back in 5) Population fleecing complete
I think the gubbermint will like it. A crash would increase unemployment, therefore they would be unable to pay welfare, so they would reduce minimum wages to the lowest ever and have soup kitchens where the new poor will queue each night. Won't affect the rich, just the working and middle classes. Shiny
Nothing would happened. This scenario already played out in 2009. People bitched and moaned for a year or two, but already they have forgotten.
Meh, I lost a bit from the compulsory industry super and it was enough for me to start up a SMSF and fill it with property and precious metals, and then rollover all my wife's funds and then talk about it with a couple of friends.
Miloman most people are clueless when it comes to super and will have it invested in the default fund of their employer and won't bother to look at from there. The default investment strategy will compromise a mix between securities something like X% cash X% bonds X% of the asx200/300 X% international shares in the way of an indexed fund like MSCI world index ex Australia X% property. These percentages are normally a fixed strategy and the funds will keep buying these securities with member contributions and reinvest dividens to maintain these ratios regardless of what happens. All superfunds will offer varying strateries with varying risk level normally named: conservative, growth, high growth etc. Some funds will let you customise how heavily you want to be invested in a security and will let you move between being completely invested in cash to any mix, but its not very sophisticated and you cant exactly go long all in on the 10YR US treasury. So the only way you can panic sell and get fleeced is if you actively balancing your super or running a SMSF. As to whether a fleecing occurs due to wide spread bankruptcies and subsequent bailouts is another matter.
Not half as much as the shattered heart I'd have now had I swapped it for 1000oz's of silver. :lol: :lol:
Easier than that, they don't care. They charge their fees whether your portfolio crashes or skyrockets. As sure-fire a bet as owning a casino, the house always wins.
They have a mandate, which you agree upon and sign up to when you select the fund and strategy (unless you don't give a shyte, and let some bozo enter you into the default). Either way, it is your choice. If you are not aware of the mandate you have signed up for, or have defaulted by carelessness...... that is not the fund managers fault. You have no right to complain when the market shits itself, and the managers carry out the strategy you asked for, for an agreed fee. They are obliged to hold in a falling market. If you could do better, then that is another choice you are able to make. Cheers
