Super Hype

I’ve just returned from the International Golden Oldies Rugby Union Festival in Brisbane (I’ll try to get around to posting something on ubersport) to find that Ken has been chastised by the cyber fairies for some, as yet undisclosed, transgression against cyberfuddle. I’ve been down at the library getting some more fodder for the grey matter and happened to read the cover story from the May 27th edition of the Bulletin. I don’t read that august journal much any more, especially since they gave Tim Blair a soapbox, but couldn’t let the drivel that misrepresented the superannuation system to go unchallenged.

Now I can’t, in all conscience, defend the funds management industry for the appalling mistakes they have made over the last couple of years, but the nonsense written in the article ” WRECK AND RUIN” by Alan Deans simply confirms the depths that the media are prepared to plumb for a contemporary story.

No doubt alerted by press release by state of the art consumer advocates like CHOICE, Bulletin writers were able to forecast poor investment results back in 2002 with scary intro pieces like “you will repeatedly hear the plaintiff cries over coming days. “We haven’t done that badly, in comparison” will rate highly along with that other great excuse, “You have to remember that you are in it for the long haul. This is just one year, after all.” The “we” being referred to is the coterie of highly paid superannuation fund managers who are to blame for losing money this year for hundreds of thousands of working Australians. For the first time in 14 years since the 1987 stockmarket crash, in fact the average super fund will show negative returns.”

It has become apparent from a couple of recent surveys such as the one conducted by ANZ and the ASIC consumer study, that probably the biggest impediment to consumer satisfaction is a lack of understanding about just what super is and how it works. Statements like “If you’re rating financial disasters, this one easily beats them all. You name it: HIH, AMP, the tech wreck and the foreign currency loans debacle combined don’t lay a glove on the mega-wipe-out that is breaking over nearly every family in Australia.” don’t help to address the problem. It probably highlights the poor grasp Alan Deans has of the subject. To describe superannuation as a “seemingly innocuous government-sponsored money scheme” is ridiculous. Employers pay the superannuation guarantee levy, governments don’t sponsor it, they tax it!

It’s obvious that Deans is more interested in hyping his story than telling the truth when he writes sensational garbage like, “Trouble is, when June 30 rolls around, some 25.1 million superannuation account holders (many Australians have more than one account) will wake up to their second year of big-time losses. Nearly $50bn has been slashed from retirement savings since mid-2001 thanks to the global slump in share prices. That is $2500 for every man, woman and child in the land, and it is being sucked into the ether at a staggering rate of $75m a day.” He obviously doesn’t understand that until the funds are withdrawn nobody has lost nothing, and that is why the legislation governing superannuation prohibits withdrawals until after fifty five, to stop idiots like Bulletin writers from crystallising their losses. Concepts such as dollar cost averaging and compound interest are way beyond the ken of your average punter because they’re never explained in the popular press. It’s sad that people already concerned by the ‘PAPER’ losses in their super fund are mislead and frightened by what is supposed to be a responsible magazine.