Super funds playing a big part in the nation’s COVID recovery

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Your superannuation fund may be playing a big part in the nation’s COVID recovery.

That is, if you have an industry super fund.

Industry super funds are helping the national economy get back to black, clawing back the national deficit of $213.7 billion by investing in capital projects which, in turn, create higher tax receipts, lower pension payments and lower interest costs.

Projects such as infrastructure and property construction – such as social housing, new airports, public transport and energy networks – all of which generate more tax revenue for the government.

These projects will create jobs which, in turn, will reduce government income support payouts and the increase in economic growth means interest rates stay low.

Industry Super Australia (ISA) estimates that spending by industry super funds should boost the budget’s bottom line by almost $2.5 billion and create around 200,000 new jobs.

Reduced reliance on government income support payments could save the nation around $45 million each year.

Should the government stay the course and increase compulsory contributions to 12 per cent by 2025, more Australians will see bigger nest eggs and fewer Australians will rely on the Age Pension, says ISA.

And while your super may fuel a faster economic recovery from the pandemic, it seems super funds themselves are also on the road to recovery.

After a rough year, funds are riding good sentiment created by opening borders and lifted restrictions, with the median balanced option returning 0.5 per cent in October.

Positive market movements in November point to continued momentum, says superannuation research house SuperRatings.

While members haven’t yet recouped losses incurred in early 2020, funds have bounced back in the second half of 2020, although SuperRatings warns members should expect further market volatility as the pandemic is brought under control.

“The super recovery is ongoing but has been faster and stronger than expected to date,” said SuperRatings executive director Kirby Rappell.

“There are clearly still significant risks and uncertainties, and we expect more market volatility heading into 2021, but overall members have reason to be reassured by the performance and resilience of funds’ portfolios this year.”

Australian shares posted a 1.9 per cent return in October as restrictions eased, COVID-19 case counts lowered and the federal budget bolstered sentiment.

“Australia’s success comes down to three things: our response to containing the virus, the extraordinary scale of the budget measures, and our superannuation system, which serves as an additional stabiliser to the economy,” said Mr Rappell.

“Looking ahead, it really depends on what a ‘COVID-normal’ world looks like. Developments on the vaccine front are very promising, but things are still uncertain in terms of how we reopen safely and how long this will take. There will still be ups and downs heading into 2021.”

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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4 Comments

Total Comments: 4
  1. 0
    0

    I can comment on my wife’s superannuation which is still in accumulation phase. As at 10 November 20 has increased by :
    6.5% since 30 June 20, or
    4.3% since 4 November 19, and
    1.7% since 31 December 19.
    In the circumstances her superannuation has done well. I think we can all be thankful that some politician had the foresight (or maybe uncanny luck) to facilitate the creation of this pool of national savings.

  2. 0
    0

    While I agree with the general principle that Super Funds can be conducive to COVID-19 recovery, concentration on infrastructure and capital works would not help the immediate needs of solid paying jobs for the economy. Infrastructure and capital works take a long time for their plans to get off the table to create jobs. When we talk about jobs, we are talking about solid paying jobs above the poverty line.

    We have to focus on other industries besides the building and construction industry. With Biden Presidency, renewable energy will be used to address climate change issues. Research and development on the generation of this energy and harnessing and packaging of this energy for marketing is a great challenge. With the advance of electric cars, bus and trucks in the fore-front, charging stations for these electrical vehicles can be an industry in its own right.

    With the address to climate change, many industries will be changed. This is because our economic pillars will be changed, i.e. fossil fuels versus renewable energy. If our super funds go with these changes, they would not only help the recovery from COVID-19, they will make bigger golden nest eggs for all retirees.

    • 0
      0

      What a negative outlook. Of course industry and infrastructure will create jobs in the short term, there are jobs that are “shovel ready” and on completion will have created infrastructure that will carry other jobs for the longer term. It’s important that industry super funds invest in Australian infrastructure and not look overseas to invest our super funds.

      I’ve had it up to pussy’s bow about the myths surrounding the proposed renewable energy and how it will create all of the jobs lost through mining and gas exploration. If renewables are such a silver bullet, why does it get subsidised so heavily. $70B has been paid so far and more to come, some from subsidies and some from the increase in electricity costs for manufacturing, business and the average householder. Mining pays its way through royalties and the only concession they get is a reduction in fuel excise because they use off-road vehicles and are not required to pay for road rebuilding.

      I have yet to find the answers to some simple questions around electric vehicles:
      How far will they travel towing a caravan?
      Are there any plans for electric trucks and farm vehicles?
      If a battery is starting to lose its power, does the vehicle travel at the same speed?
      Will disposal of batteries cause an environmental problem?
      Under current conditions, if I drive from Sydney to Melbourne, I can reach there in about 10 hours with breaks and 1 fuel stop but if I use an electric vehicle, I will need to stop at least twice and there is no definitive answer as to how long that will take as there won’t be unlimited charging points.
      My phone battery, when new, lasted about 3 days before recharging but now it only lasts a day. Will car batteries also lose the amount of charge as they age?
      What happens if a battery stops working in the middle of nowhere? Do we send for a can of volts?
      How much will it cost to recharge a battery?
      How much will charging at home add to an already overinflated electricity bill with current renewable research costs added in?

      Too many questions, too few answers. Oh wait, that’s right, new technology will be developed to cover any problems.

  3. 0
    0

    “Your superannuation fund may be playing a big part in the nation’s COVID recovery.
    That is, if you have an industry super fund.”

    So after spending months disparaging retail fund now the writer plays the ‘guilt’ card.

    “After a rough year, funds are riding good sentiment created by opening borders and lifted restrictions, with the median balanced option returning 0.5 per cent in October.”

    Well maybe if you are in an industry fund. My fund on the other hand recovered all the March/April losses by June and has continued to rise since then. And well above the 0.5% mentioned here.

    No doubt this will be deleted too like the first time I posted it because it doesn’t fit with the narrative, right?


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