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Draining entire superannuation savings wouldn’t cover most young couples’ home deposits, research finds (www.theguardian.com)

submitted 7 months ago by [email protected] to c/[email protected]

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Research by the Association of Superannuation Funds of Australia casts doubt on the Coalition’s plan

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[–] [email protected] 6 points 7 months ago* (last edited 7 months ago) (2 children)

I worked in the superannuation industry for a while. I wouldn't say that super is exactly a scam but it's a terrible mess and the fees we pay on super in Australia are insane. Basically we have a lot of parasites taking a cut and that ends up making the standard funds poor investments. Median returns on the super funds are around 5.6% pa (over the last ten years for the standard "balanced" option) at a time when stock market tracking funds have appreciated by over 8% pa. A lot of that is being lost in inefficiencies and fees.

By comparison Americans with a 401k invested in the NASDAQ would have made 17.3% pa over the same period.

We're getting a terrible deal with superannuation, and for many it's the difference between retiring comfortably or retiring in poverty.

[–] [email protected] 3 points 7 months ago

Cherry picking an article seems to suggest the US has similar problems https://www.investmentzen.com/blog/average-401k-return

Australia's superannuation has improved over time. For example, the MySuper reforns led to consolidation and an exodus of underperforming funds.

A quick search on some of the biggest super funds in Aus shows returns of > 9% in a more equivalent, potentially volatile "high growth" fund.

There are funds that offer lower cost index-tracking products if that's your thing.

The biggest problem, IMO, is financial literacy which needs to play a bigger role in education.

[–] [email protected] 3 points 7 months ago (1 children)

Are you comparing a balanced option against a 100% stocks option? That's hardly a fair comparison.

[–] [email protected] 1 points 7 months ago

It's a fair point but my intention was to bracket the possible returns.