Superannuation, the ultimate government cash cow?

[mullokintyre]

Just a bit more on the Australian Super loss, from the AFR daily email.

“Private credit is the junk bond of 2024 … They went nuts at zero interest rates, chasing yield. Now that rates have risen, and the economy has softened, plenty of companies are in trouble and need to be written down,” said one major venture capital investor, speaking on condition of anonymity to avoid jeopardising their relationship with AustralianSuper.

Great just what we need.
Another debacle like the junk bond debacle.
Mick

 

[sptrawler]

I think we need a specific thread on the role of Private Equity , because its very relevant to manufactured returns that big super seem so proud of (and called a cancer by many).

wrt this AustSuper mess. from AFR :

"AustralianSuper making those sorts of bets; that’s what’s required to try to make 10 per cent a year for members, the number every chief investment officer has to endeavour to beat every year. However, it is about balance and realising the risks.

""AustralianSuper’s private equity boss Mark Hargraves said the asset class was the fund’s top-performing in the past decade, making 12 per cent a year for members. He blamed Pluralsight’s demise on “the combination of deteriorating sales revenue from US corporates due to cost-cutting and the increase in debt service costs due to higher interest rates led to a sharp deterioration in the company’s trading performance triggering a restructure”.

... and here we are. PE doesn't price daily, and to me it's fake returns. All those unlisted assets look great , until they're not. And all those brag adverts, just based on hot air.

Nailed it.

 

[divs4ever]

So 0.3% loss. Not good but not a disaster. Of course that's based on present value not the value when the investment was made. Me nitpicking as usual.

you make that sound like a bad thing ( and sometimes it isn't a bad thing at all )

 

[divs4ever]

Just a bit more on the Australian Super loss, from the AFR daily email.

​

​ “Private credit is the junk bond of 2024 … They went nuts at zero interest rates, chasing yield. Now that rates have risen, and the economy has softened, plenty of companies are in trouble and need to be written down,” said one major venture capital investor, speaking on condition of anonymity to avoid jeopardising their relationship with AustralianSuper.

​

Great just what we need.
Another debacle like the junk bond debacle.
Mick

i have been watching that trend , and wondering how liquid they were ( and the actual risk rating )

i remember reading about private trusts buying into real estate , and how that went wrong in the GFC

but yes , just when you think lessons were learned in the GFC , you find out some did NOT learn ( and in fact quadrupled down , expecting to be thrown a life-line )

 

[sptrawler]

i have been watching that trend , and wondering how liquid they were ( and the actual risk rating )

i remember reading about private trusts buying into real estate , and how that went wrong in the GFC

but yes , just when you think lessons were learned in the GFC , you find out some did NOT learn ( and in fact quadrupled down , expecting to be thrown a life-line )

Go back even further to the 1987 crash and unlisted property trusts.

The super funds are a quasi Govt slush fund IMO, it is in the best interest of the Govt and the members that the funds provide for a better retirement, which is a broad statement.

Does better retirement mean more social housing and clean energy?
To some yes, to others probably not.

 

[qldfrog]

I wonder what it is as a proportion of total funds of AS? Probably not high but nevertheless some contrition on behalf of AS members would be nice but it seems that is not the done thing in these modern times.

If a Trustee of a SMSF rode an investment into the ground and lost $5k rather than getting out at $2.5k a quisical eye would be cast upon them but not so with these big buggers. That's my view for what it's worth which isn't much.

I did the check when i got the news first: 330 billions under management but some of it in cash and some holders like me handle own choices and do not access these options
I believe these 1.1b will end a sizeable amount of the specific funds affected

 

[redsmartie]

20% into defensive for me. When selecting reverse gear always watch the reversing camera, mirror etc. Hope the farm does not catch on fire.

 

[qldfrog]

AusSuper’s mobile towers empire slumps deep into the red

The country’s largest superannuation investor was already at odds with its partner, Singtel-owned Optus, over a delay in rolling out network infrastructure.

www.afr.com

So millions to pay dearly for buying inflated price assets with not control.
I am a member, but luckily managed 90% of the funds directly

 

[sptrawler]

AusSuper’s mobile towers empire slumps deep into the red

The country’s largest superannuation investor was already at odds with its partner, Singtel-owned Optus, over a delay in rolling out network infrastructure.

www.afr.com

So millions to pay dearly for buying inflated price assets with not control.
I am a member, but luckily managed 90% of the funds directly

It wont matter, a new batch of money coming in next payday and a new group of members being born or getting off a plane every day.
Lol a never ending supply of money, it can't go wrong, can it?

 

[Dona Ferentes]

from a Morningstar report:

The country’s two largest superannuation funds, AustralianSuper and Australian Retirement Trust, are pulling away from the rivals and now account for more than half of all new retirement savings and more than $655 billion in assets.

That compares to $700 billion overseen by their five largest industry super fund rivals – UniSuper, Hostplus, Cbus, Rest and HESTA – a gulf that has grown over the decade.
.
MySuper products had an aggregate $976 million in assets, spread across 61 MySuper products. ..And SMSFs combined hold almost as much

 

[qldfrog]

And some more pr for AustralianSuper

‘No excuse’: ASIC seeks $27m fine against super giant for customer care fail

The corporate watchdog asked the Federal Court for a penalty with “real sting and burden” against AustralianSuper as a warning to the wider sector.

www.afr.com

27millions from super members going as a fine..will teach the bastards .
The irony is lost?
Thanks ASIC, so happy to send you my money....

 

[Dona Ferentes]

And some more pr for AustralianSuper

so how does this work?

[ASIC] told the court there was “absolutely no excuse” for such a big outfit to have failed to look after members.
... sued the fund in September last year over its failure to consolidate the accounts of more than 90,000 members, costing them a collective $69 million.

It claimed this breached AustralianSuper’s obligation to act in members’ best financial interests, as their retirement savings were unnecessarily eaten away by duplicate fees and insurance premiums

So, act inefficiently and fritter away money, then have to pay a fine.

And this money belongs to whom?

I like my SMSF more and more

 

[qldfrog]

so how does this work?


So, act inefficiently and fritter away money, then have to pay a fine.

And this money belongs to whom?

I like my SMSF more and more

Indeed, so my sarcastic tone:
A bit like fining cba customers if cba overcharged them.
These ASIC guys are a joke

 

[Bellcose]

One of my children sent me the link to this article of yesterday. So nice of ART not to communicate it had an issue. It may have advised "affected" members but not necessarily in a timely manner it would appear. Otherwise, the attitude of ART seems to be rather insular.

A major super fund had an outage this week. Almost no one realised

If a bank or major employer went down for nearly two days, it would be all over the news. But retirees continue to be invisible to the media and regulators.

www.smh.com.au

 

[qldfrog]

One of my children sent me the link to this article of yesterday. So nice of ART not to communicate it had an issue. It may have advised "affected" members but not necessarily in a timely manner it would appear. Otherwise, the attitude of ART seems to be rather insular.

A major super fund had an outage this week. Almost no one realised

If a bank or major employer went down for nearly two days, it would be all over the news. But retirees continue to be invisible to the media and regulators.

www.smh.com.au

Indeed, these finds are not subjected to much constraints
Not public companies.. so losses can go unnoticed,undeclared; no media attention, a bit of a shady area considering the sums involved which, even if it may surprise these entities, do not belong to them in the first place.

 

[Bellcose]

Indeed, these finds are not subjected to much constraints
Not public companies.. so losses can go unnoticed,undeclared; no media attention, a bit of a shady area considering the sums involved which, even if it may surprise these entities, do not belong to them in the first place.

This will thrill you (maybe). Superannuation Fund expenses. Going to Annual Fund Level Superannuation Statistics and then the xls expenditure, in Table 1, makes for interesting read. Why the heck are the funds involved in sponsorship? Admittedly the amounts are, as a percentage of assets, bugger all but it's still money the members of the fund are effectively paying even if they don't know they are. The amounts are $m.

APRA increases transparency of super fund expenses | APRA

APRA has released its inaugural publication of the fund level data on expenditure covering a broad range of categories, including investment-related expenses, as well as administration and other expenditure, such as advertising, sponsorship and payments to industrial bodies.

www.apra.gov.au

 

[qldfrog]

This will thrill you (maybe). Superannuation Fund expenses. Going to Annual Fund Level Superannuation Statistics and then the xls expenditure, in Table 1, makes for interesting read. Why the heck are the funds involved in sponsorship? Admittedly the amounts are, as a percentage of assets, bugger all but it's still money the members of the fund are effectively paying even if they don't know they are. The amounts are $m.

View attachment 187189

APRA increases transparency of super fund expenses | APRA

APRA has released its inaugural publication of the fund level data on expenditure covering a broad range of categories, including investment-related expenses, as well as administration and other expenditure, such as advertising, sponsorship and payments to industrial bodies.

www.apra.gov.au

I know, i specifically contacted my super at the time when they paid Oprah for a brisbane talk show: i mentioned to them that they were legally bound to work to increase retirees fund balance.
The answer was bs about this helping to add members and so reduce admjn costs per member etc
There is probably as well a cause for a class action on the ESG position they take.
Unless i tell them otherwise, Raytheon and Phil Morris should be considered and tobacco companies have had a great run in the US

 

[Bellcose]

I believe an industry fund (Cbus) got pinged by the regulator for delaying the payment of death benefits for a few thousand members sometimes taking around a year to pay it.

Reason for delay? We've outsourced the process to a third party and it didn't do things in a timely manner. OK, right, I see.

Hmm, just because you outsource an activity doesn't mean you can abnegate your responsibility for it. What you really mean is you didn't have adequate processes in place to monitor the third party to ensure cases were processed within an appropriate time-frame. In other words, you didn't care. You naughty, naughty Trustees.

 

[sptrawler]

Chalmers directs Future Fund to invest in housing and renewables

The treasurer has directed the country’s sovereign wealth fund to prioritise investments in housing, renewable energy and infrastructure.

www.afr.com

Well that didn't take long to happen.

 

[farmerge]

I believe an industry fund (Cbus) got pinged by the regulator for delaying the payment of death benefits for a few thousand members sometimes taking around a year to pay it.

Reason for delay? We've outsourced the process to a third party and it didn't do things in a timely manner. OK, right, I see.

Hmm, just because you outsource an activity doesn't mean you can abnegate your responsibility for it. What you really mean is you didn't have adequate processes in place to monitor the third party to ensure cases were processed within an appropriate time-frame. In other words, you didn't care. You naughty, naughty Trustees.

@Bellcose I came to the conclusion many years ago that the money we were putting into super, once it left our control, it became the super funds, and their care to us was close to zilch.
Hence we closed off that fund and started investing in real estate.
At least we had control of what was ours and we knew what the outgoing costs were.