There’s been lots of bad news recently, but the most jarring statistic to cross my desk was buried in the latest statistics from the Australian Prudential Regulatory Authority — that 2161 corporate funds existed by the end of September 2002.
According to my calculations, that’s a drop of 472 — or 18 per cent of the corporate funds that existed — from the end of June 2002. Funds are certainly more likely to take the outsourcing plunge after the end of the financial year, but it is still a big figure considering 602 corporate funds disappeared during the entire financial year to end June 2002. It highlights just how tough things are out there.
This year opens on a shaky note. As MLC notes, there are probably only two things we can be certain of on the investment front. The first is that the year will be volatile as expectations about the growth and profit cycles fluctuate, while hopes and fears about military conflict and terrorism influence investors’ attitude to risk. The second is that nobody can reliably predict returns for markets.
For those running a super fund, there are probably also two certainties: that the regulatory burden will intensify and that member demands will rise.
One suggestion made to super funds is that they cut costs by negotiating better rates with suppliers, but many suppliers have problems of their own. Administrators are struggling (see p24) and fund managers are stressed out as they deal with sliding returns, frantic consolidation and worries about whether they’ll have a job next week.
Right now, we are not hearing too much about adequacy, only about how much was lost of the money members already had in super. But there are some interesting initiatives underway which might make a dent, albeit small, in the adequacy problem.
One is the Senate Select Committee on Superannuation’s new inquiry into planning for retirement (see p12) which will examine aspects like whether the concept of a fixed retirement age is relevant and retraining for those who want to continue working longer.
The Government is seen as wanting to increase the retirement age and some interesting submissions from other organisations have been leaked to the press. If they are anything to go by, there’ll be much heated debate in the months ahead. It’s time that our society’s changing demographics are recognised and there’s plenty of scope to ease the pressures on the public purse, but let’s hope that any changes give older people more choices and a better quality of life rather than more burdens.
