Pension funds in Australia (or “Super”, in the vernacular) are, obviously, a big deal.
To a large degree, they are a captured market as legislation requires all employers to contribute 9.5% of salary into an employee’s chosen fund.
Typically, there isn’t much movement between funds, you are offered one when you start work and many people don’t pay attention to which is good, bad or mediocre.
Similarly, and like passive investors the world over, people don’t tend to pay much attention to what investment choices their Super fund is making on their behalf. One occasionally hears horror stories about people close to retirement in 2008 suddenly discovering they were all in on USA CDOs.
One such Super fund is Hostplus, the “industry” fund for people working in hospitality. Obviously, one doesn’t have to sign up to Hostplus, but I assume it’s one of the main options offered when you start a job.
Hostplus’ members are worst hit by this virus-induced recession and presumably most likely to want to take advantage of the changed rules allowing early access to $20,000 of their money.
Hostplus have a problem though;
They’ve slipped a clause into their product disclosure statement preventing members from withdrawing funds. It’s not clear whether this is even allowed under legislation such as the Corporations Act, but regardless, it’s a bad precedent and one that won’t give people much comfort in the security of their pensions.
There is a some mild amusement to be had at the directors’ expense (well, ultimately the members’ expense, poor bastards);
What follows is not financial advice, and you should never seek financial advice from pseudonymous bloggers on the internet.
However if you are young enough for this current crisis to not completely destroy your imminent retirement plans, may I suggest taking a far more active interest in the following elements of your finances;
- Is a single managed fund really the best option for you, or should you consider diversifying across funds (e.g. via a self-managed fund)?
- If you are staying in a managed fund, are you really invested in diverse (asset class and geography) assets?
- Are the management fees fair value?
- How quickly can you pivot your investments if required?
- How is your financial advisor paid and by whom?
“Feed the birds, tuppence a bag“.