In 2017, superannuation rules experienced the most significant changes in a decade, but it's a false hope to believe we now have a stable system. The recent focus on Labor's new dividend imputation policy has deflected attention from their other plans.
Last week, Senator Kristina Keneally gave a speech (on behalf of the Shadow Treasurer, Chris Bowen) to the Financial Services Council where she renewed some commitments:
"We oppose the Government's measures to allow catch up concessional contributions and tax deductibility on personal superannuation concessions contributors. We will also lower the annual non-concessional contributions cap to $75,000 and further lower the high income super contribution threshold to $200,000. We believe in increasing the superannuation guarantee to 12% when fiscal circumstances allow, which will greatly assist in maximising people's retirement incomes in the future."
On cue, later that day, Kelly O'Dwyer, the Minister for Revenue and Financial Services, spoke at the AFR Banking and Wealth Summit on the many differences in party policies, and there was this sting in the tail for the super guarantee legislated increases:
"Nor would it be right to think that the super guarantee particularly benefits low income earners. Far from it. In fact, many low income earners are being forced to save for a higher standard of living in retirement than they can afford while they are working."
So Labor and the Coalition can't even agree whether more superannuation is good for working class Australians. Ironically, it's the Coalition championing for low income earners.
Little of this argy-bargy helps public confidence in super, and the oft-repeated claim that it's now better to have savings of $500,000 rather than $1 million simply confuses everyone, as we explain. Later, Mark Ellem reminds us that despite the 2017 changes, there remain many beneficial ways to make extra super contributions.
Asset allocations
The biggest uncertainty in planning for retirement is not knowing how long money should last, and Don Ezra offers a three-goal retirement framework. Kej Somaia questions whether the traditional 'set and forget' asset allocation still works, while Ted Richardsdraws on his 16 years as a professional footballer for insights into long-term investing.
On other subjects, Donal Griffin looks at the John Hemmes court decision to issue a warning about estate planning, while Greg Cooper explains why we need an alternative to the small caps index. A recent survey showed 82% of Australians want their investments to consider major social issues, and Rob Wilson shows why investors will benefit from incorporating these ESG factors.
Spaceship and its misleading claims
One of the most popular articles ever in Cuffelinks with almost 35,000 views was our analysis in July 2017 of the Spaceship superannuation fund. This week, ASIC fined Spaceship and its trustee, Tidswell, for false and misleading conduct. ASIC said their promotional statements prioritised marketing over accurate disclosure:
"ASIC’s concern is that these statements mislead prospective members of the fund because at the time 79% of the fund was invested in index-tracking funds, which involved no qualitative analysis of the underlying companies."
Spaceship launched before it was ready for public investment. They did not describe the product properly, they assumed nobody would test their claims and their systems did not work well. They followed the Silicon Valley start-up mentality of speed to market and learn as you go, but this is inappropriate for superannuation in a regulated industry. They have since lowered fees and improved communications, as they should have from the start.
This week's White Paper from AMP Capital looks at conditions in the residential property market and asks if a correction is coming.
The additional features below include a new report from NAB/nabtrade, the ASX Listed Bond and Hybrid Rate Sheet, showing spreads and maturities on securities that can be bought on the exchange, plus the latest ETF Review from BetaShares. We also include IIR's Microcap Newsletter which examines some smaller company opportunities.
Graham Hand, Managing Editor
Edition 248 | 13 Apr 2018 | Editorial | Newsletter