Aussies want increased clarity on how their super is invested

Around 46 per cent of Australians don’t know how their super is invested.

Aussies want increased clarity on how their super is invested

A recent study has found that Australians want increased transparency about how their superannuation is invested, with many unsure of where their money goes.

The Market Force study, which surveyed 1017 respondents, revealed that around 83 per cent of managed assets in Australia’s largest super funds – amounting to around $1 trillion – did not disclose any information about how superannuants’ money is invested.

Fund managers, such as BT, Colonial First State, and Macquarie, operated wrap platforms, which provide a convenient method of investment but do not reveal how money is consigned.

Energy Super was the only fund that disclosed its entire portfolio. A further three funds, HOSTPlus, Cbus and VicSuper, disclosed around 50 per cent of their holdings.

One particularly revealing statistic shows how Australians are welcoming investment in renewables, with 64 per cent of Australians wanting their super funds to scale back investment in fossil fuels and just under one third of them (32 per cent) saying they would switch if they knew their fund was investing in coal seam gas extraction.

The majority of Australians (59 per cent) say their super fund was chosen by their employer, with 46 per cent of those surveyed saying they had ‘very little idea’ about how their money is invested. Overall, 86 per cent of Australians believe they have the right to know how their super is invested.

According to Market Force analyst, Daniel Gocher: "Australians are in the dark about whether their money is supporting environmentally destructive companies because our compulsory superannuation is an investment black box.

"Though the industry claims to support the improvement of disclosure standards, the reality shows this is manifestly not the case. Australians have a right to know where our money is invested and transparency is a vital first step to enabling it to be used as a force for good."

Read the Market Forces Superannuation Survey 2016

Opinion: Do you care where your money goes?

Perhaps the most disturbing finding of this report is just how many Australians don’t know how their super is invested. Many simply sign the paperwork and hope their fund is ably managed.

However, although many Australians don’t know how their superannuation is invested, the one-third of super fund holders who would switch to funds that don’t invest in fossil fuels shows how the multi-trillion-dollar superannuation industry has potential to create real change and, hopefully, reap the rewards of early investment in renewables.

We are seeing the beginnings of a global economic trend of renewable energy investment, and for good reason. We are approaching the end of the fossil fuel age and, as any savvy investor will tell you, getting ahead of the next wave – in this case renewable energy investment – is a smart way to invest.

According to the Thomson Reuters/Future Super Australia Fossil Free Index, fossil-free investment strategies returned 4.96 per cent in 2015, while the broader share market returned only 2.12 per cent. Estimates from superannuation research firm Chant West show that, on average, balanced investment funds returned around 5.7 per cent in 2015, with funds that avoid any investment in fossil fuels returning 7.04 per cent.

The survey also underlines just how confusing superannuation can be for some. With so many Australians placing their life savings – and their future income – in the hands of super fund managers, the need for increased transparency becomes more imperative. After all, we have the right to know how our money is being invested. I, for one, wouldn’t want my savings splurged on a dying industry. I’d like to know where my money is going. Of course I am concerned with returns – after all, it is from that money that I will, hopefully, live out my later years. But I also hope to live those years with clean air and hope for future generations.

With so much money tied up in super, there is potential to invest and lay the groundwork for this change. Investing in renewables now will ensure a brighter future for all subsequent generations to live in a clean-energy-producing world.

Where the money goes, industry follows, and in this case, trillions of dollars invested in a clean future would make a very big statement to governments and corporations still pushing antiquated, dirty energy sources on to the masses. But it’s one thing to be the idealist and another to want some guarantee that my fund – ethical or not – will provide me with an income that will sustain me through my retirement. Until that day comes, Australians will be more likely to stick with what they know or – in the case of 46 per cent – don’t know.

Do you know, or care, where your money is invested? If a fund that invested in renewables could provide some guarantee of a sustainable, ethically sourced income, would you switch? Are you happy with your super fund?

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    COMMENTS

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    27th Sep 2016
    10:21am
    IF you want a comfortable retirement - you will most definitely care where every cent is invested.

    You also want to know that by the end of the financial year each one of those little cents are red in the face, sweating and panting really hard - because you have worked them to death to make sure they got the best return.

    You want to watch anything with a WRAP in it - they suck you in with making easy reporting and investing - but it will have anything up to 3 layers of commissions included - the WRAP provider, the manage funds you are invested in and your advisor.

    An SMSF makes it easy to do nearly anything in terms of investments - but regardless how you manage your super - you just need to make sure your fees are low and you know where your money is invested and how well it is working. But that means you have to take some solid interest in investing.
    Mamacrystal
    27th Sep 2016
    10:45am
    I joined QSuper when I was still working and in Queensland.....I found them good for my small amount of super

    27th Sep 2016
    11:42am
    A look at your superannuation provider's PDS, your annual report, or catalogue of options would be a dandy start.
    KSS
    27th Sep 2016
    1:08pm
    I am not sure I actually believe this research. If you ask people if they want to invest in renewable resources rather than fossil fuels for example most would probably say yes. Bingo 81%! However, how many have actually asked their funds where any of their money is being invested, how many have ever even told their funds where to invest or how to broadly split the investment (e.g. Australian Shares, International shares, cash etc)? Very few I would suspect. And if you are that concerned about it wouldn't you do some investigations yourself?

    Then think about all the millions of so called 'lost' super where people have forgotten accounts. How does that even happen?

    No. I think this 'report' is more about having a bash at the superfunds and less about people's 'right to know' where their money is invested.
    john
    27th Sep 2016
    1:17pm
    Buy bricks and mortor. Stock market investment is a terrible risk for people with only small amounts of super. Since 2008 everything seems to have gone belly up. And with the gobbley gook that financiers blab out , that most people can't understand , how the hell do you know where your going, the world, all of us, owes someone something , whose lending the money?When the USA and the World Bank don't know whats happening , manipulated system is the stock market , every thing is planned and fixed for the tiny wealthy group. Who sets interset rates , any where, racketeering I call it. There has to be a safer and better way for people to invest personally in business, because the stock market is a big T.A.B.
    Anonymous
    27th Sep 2016
    1:38pm
    Amen to that brother - but if the present manipulation by the central banks eventually breaks the share market - it will eventually be the place to be to make money - not real estate.
    Old Geezer
    27th Sep 2016
    2:23pm
    Rubbish even housing has not appreciated as much as say the CBA.
    Anonymous
    27th Sep 2016
    2:47pm
    As usual OG - a selective and totally uninformative amateur investor response.

    * Over what time-frame?

    * Compared to which property?

    * Which suburb?

    * Industrial or residential?

    * etc

    You are a superficial investment dope - go away.
    Old Geezer
    27th Sep 2016
    2:54pm
    All I say is that if I am an investment dope then I have become a very successful investment dope.
    Anonymous
    27th Sep 2016
    2:58pm
    A legend in your own mind
    Old Geezer
    27th Sep 2016
    3:04pm
    Ha ha Reasons you have become Rainey with new spots.
    Anonymous
    27th Sep 2016
    4:35pm
    If he ALSO told you that you are a vacuous individual of little actual investing knowledge or substance - so be it.
    Retired Knowall
    27th Sep 2016
    1:29pm
    You forgot to mention REST, very transparent with all their accounts and so far has been one of the top performers. Google Chant West for a list of A grade providers. How many of those surveyed would be able to understand the information provided
    Old Geezer
    27th Sep 2016
    2:22pm
    I was shown a statement from REST for a young lady that had a part time job and her fees were higher than what she had coming in.
    Retired Knowall
    28th Sep 2016
    7:54am
    That can happen if the contributions are too low. My account pays fees at the lower end at 0.3%.
    Old Geezer
    27th Sep 2016
    2:26pm
    It may be nice to feel warm and fuzzy because your super fund is not invested in resources (I haven't found one that is not in some way) but the highest performer lately in the top 50 has been BHP.

    27th Sep 2016
    2:39pm
    I believe that the majority of people with superannuation want to see their funds grow to be able to reach a figure that will allow an easier retirement. I don't believe that that majority gives a fig as to where funds are invested. If people feel so strongly about where their money goes and what it is supporting then let them use a SMSF.
    I've had a gutful of being told by a vocal minority what I can and can't do. These are the people who won't allow children to celebrate Christmas because it might upset those of other faiths. Other faiths make up less than 10% of Australia. These are the people who want same sex marriage. Homosexuals make up about 3% of Australia. These are the people who want Aborigines to be written into the Constitution. Aborigines make up about 2.5% of Australia. These are people with loud voices and, sadly, a lot of them work in the media and this gives a false impression that their hobby horses are the most important problems facing Australia. They are not!
    Old Geezer
    27th Sep 2016
    2:55pm
    Agree too much emphasis on minority issues for minority groups now.
    Anonymous
    27th Sep 2016
    5:12pm
    Actually it seems that your 3% is off by a significant amount Old Man - the Australian LGBTI population are likely not the minority you think they are.

    Taken from the link below...

    "Australians of diverse sexual orientation, sex or gender identity may account for up to 11 per cent of the Australian population."

    "The reported number of same-sex couples has more than tripled between 1996 and 2011."

    https://www.humanrights.gov.au/face-facts-lesbian-gay-bisexual-trans-and-intersex-people
    Anonymous
    27th Sep 2016
    6:00pm
    Thanks Reasons, I wonder how they multiply.
    Anonymous
    27th Sep 2016
    6:42pm
    old man this has to be the best quote of the year if not the century
    Anonymous
    27th Sep 2016
    7:43pm
    Just checked a few sites that give statistics on the percentage of homosexuals in Australia Reasons and I stand by my figures. This link is for Wikipedia which is the only independent site I could find.

    https://en.wikipedia.org/wiki/Demographics_of_sexual_orientation

    I checked the percentage of your statistics on same sex couples and although your figures are correct, they are skewed in that the percentage of about 11% is for couples, same sex versus non same sex. Homosexuals are about 3% of the Australian population.
    Rae
    28th Sep 2016
    7:30am
    Have to agree that an awful lot of money, time and effort is being spent of a very few whilst many services for all suffer from lack of that money time and effort.

    I am bemused that a few ultra conservatives hold enough power and bigotry though to make Australia seem the dimwits of the planet over SSM.

    Once again it was Howard that set this up to distract, waste the time, money and effort. You have to wonder about just who his masters were and what their agenda is.

    The billions being flung at the Aboriginal community
    without much result also needs a good investigating. Wouldn't surprise me if private white fella organisations were getting all that cream.

    As for Christmas and even a few good old favourite pagan festivals I reckon we should insist on continuing the celebrations and be damned to the placating wowsers.
    Old Geezer
    28th Sep 2016
    9:20am
    More like the media gets more mileage out of these than the real issues.
    Trevine
    27th Sep 2016
    7:12pm
    Could anyone tell me how good the ESSS Super fund is.
    Anonymous
    27th Sep 2016
    7:58pm
    Trevine - I was interested to see as I know someone that uses them.

    ESSS charges over 1% in fees annually - if you had $500K accumulated you would be paying over $5K in fees - that is HIGH.

    To put that in perspective, if you made 2.85% as ESSS are presently - and they take around 1% in fees - they are getting a ~35% return compared to your 2.85% (1% divided by 2.85% x 100).

    To put that another way - if you had $100K in your super account, you would only make $2850 for the year - ESSS would make $1000 - OR - ~35% of YOUR PROFIT. You should have got $3850 - but ESSS took ~35% (their 1% fee on your total super amount) . Note - these crews DON'T like you stating their cut this way - they will say they are just taking 1% - but it is still ~35% of your profit - regardless of what they say.

    If you were getting a higher return - the 1% fee would reduce their cut lower down from ~35% of course.

    As you will see from the chart in the following link, they are not producing great returns presently - and have under performed the industry average...

    http://www.ratecity.com.au/superannuation/emergency-services-superannuation-scheme/esssuper-accumulation-plan-for-emergency-services-participating-employers

    There are only 3 reviews here - but one sure hates the fees...

    http://www.productreview.com.au/p/esssuper.html

    Hope that assists you a bit.
    Anonymous
    27th Sep 2016
    8:16pm
    Trevine - to put those ESSS fees in perspective compared to what I pay for our SMSF fees annually. I pay a total of $1,414 per year to an online SMSF company called Esuperfund for all annual compliance work to be done - regardless of the total amount we have in our super. There are additional transaction costs when I buy/sell shares, etc.

    However, I need to do my own investing - my compliance company does not do that in their fee. ESSS value-adds by doing that investing stuff for you - but you pay for that service in the higher annual fees.
    Old Geezer
    27th Sep 2016
    9:04pm
    Those returns on ESSS are pretty low as well.
    Anonymous
    27th Sep 2016
    9:28pm
    An amazingly prescient observation - oh - it's what I wrote...

    "As you will see from the chart in the following link, they are not producing great returns presently - and have under performed the industry average..."

    Pity you did not have the skills and background to write up this type of analysis with supporting numbers - you could occasionally write something useful and assist someone.
    Old Geezer
    28th Sep 2016
    9:18am
    Yes I know you wrote that but I take nothing on face value so I went and checked out the returns on their website. No I wasn't impressed with their returns at all. Approx 6% is not good when long term average is about 10%. I aim to do better than this long term average and if I don't double it I feel I am not doing my job well at all.
    Anonymous
    28th Sep 2016
    9:25am
    `Twas brillig, and the slithy toves
    Did gyre and gimble in the wabe:
    All mimsy were the borogoves,
    And the mome raths outgrabe.

    Lewis Carroll writes clearer and more meaniful prose
    Old Geezer
    28th Sep 2016
    11:28am
    Awesome! Meanwhile I enjoy the fruits of my making money while I sleep.
    Old Geezer
    28th Sep 2016
    11:30am
    I'm actually feeling good today as I spent $3 and did something that I was told couldn't be done by an expert and made over $1100.00. I'll let you calculate that return.
    Anonymous
    28th Sep 2016
    11:45am
    If you can't calculate it - then as usual - it didn't happen.
    PIXAPD
    28th Sep 2016
    2:39pm
    So long a s the money isn't going to help ISIS.....
    ex PS
    28th Sep 2016
    2:55pm
    I have a Super Pension with Q-Super, I pick the risk zone I want to invest in and using that have several options to choose from, I can make several changes per year without it costing me money and can see performance history and projections over the previous year and one to five years ahead. I can access all of this on-line and make changes the same way. Admittedly performance history and projections are not a guarantee of actual performance, but it does give you a rough guideline.
    I have been retired for four years and have at the very least doubled what you would get on Term Deposits easily. The fees are line with what you would pay for a financial adviser and are about what the average punter would pay to have an annual audit done on a Self Managed Super Fund. And that is playing very conservatively by having most of my funds in Balanced or Moderate investment strategies.
    I am not a financial expert but find the investment strategies offered by Q-Super to be easy to understand and implement, there is always advice available if required and I have found that I am able to live quite comfortably on the returns.
    I do dable in the stock market with money from the sale of a house, but it is money that I can afford to lose because it is not factored into my retirement plan.
    Understanding how and where my Super is invested has given me peace of mind and the confidence to choose retirement strategies for my wife and myself.