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.”
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?