Facts speak louder than statistics

Wednesday, 30 September 2009

Super Idea?


There are still calls out there for Superannuation (Super) funds to be forced to invest in infrastructure projects despite the fact that Super funds are in reality accounts held in trust and therefore private money.

To force that money to be invested in specific areas is something for a planned economy which is something Australia doesn’t have.

Unlike other financial accounts that are available such as term deposits Super does not come with a fixed interest rate. That being the case Super needs to be free to be invested where the highest return can be gained.

In any case I’m not sure how there can be a return for money that is ‘invested’ in infrastructure projects, especially ones that lose money. (Lane Cove Tunnel faces sale as losses spiral)

What would they say to people whose money was forced to invest in a failed project? How would they tell someone their retirement money is a much lower amount than what it should have been? Would it be “Whoopsie, my bad!”?

Whatever was said it wouldn’t help the people who would lose out on such a deal.

Super isn’t just sitting there doing nothing, Super is doing something, it is doing exactly what invested money is supposed to be doing and that is growing wealth for the holders of the accounts so their retirements can be better funded.

Super has no other function outside of this.

You can’t offer an IOU to people either, the money has to be invested to get a return. Uninvested money does not make money and if you’re paying outgoing fund members using money from incoming members then it would appear you are operating a ponzi scheme.

I for one don’t want any less of a return on my Super to pay for the wish lists of others.