Super New Year

Welcome To 2021

I am sure we are all delighted to see the back of 2020 but then again I am sure there are some challenges to be faced in 2021 of a possibly similar scale. With the start of a new year, it’s a good time to think about your super. 

Although, it’s not such a silly question to ask, is it mine? There is still a large proportion of the working population who do not really own their super as they give it very little attention. And with the government’s current regulatory program it does appear that the government is potentially indicating their future intention to own your asset.

So why is it important to pay attention to super? Here are a few opinions you should keep in mind.

• Anyone working full time and not paying attention to their super is essentially reducing their accumulation of asset by half at age forty.
  
  
• Time in the market is so financially powerful and yet most people don’t worry about their lack of attention to super for the first 20 years of their career.
  
  
• Just an extra 1% additional in your super for 25 years results in an increase in your projected income in retirement of over 20% per annum in today’s dollars for the first 20 years of retirement.

In short, someone else seems to be benefiting more from your super than you are. If you do not start paying attention to the management of your asset, I can assure you someone else is enjoying your benefits.

Is It Someone Else’s Fault?

Compulsory super was introduced in 1992 and the government has had numerous attempts at sorting out problems since. I suspect there will be ongoing regulation this year and next as different initiatives by the government play out:

• There exists an APRA heat map, intended to benchmark good versus dud funds but limited to MySuper.  Visit here if you want to read the information paper.
   
• The ATO has been given a budget to develop a product comparator tool for use by the public.  This initiative along with the existence of the APRA heat map might represent significant interference around super being a personal or a community asset.
  
  
• The government intends to staple a super product to an individual for their first job, in an effort to make sure employees do not end up with multiple super accounts.
  
  
• The government wants to have the right to act on their conclusions around the performance of product and, at present, if a particular product is underperforming on MySuper, the government can stop them accepting future contributions.

Personally I believe super is a personal asset and maybe, as a regulatory force for super, the government has proven themselves to be less than competent since 1992.


Market Indicators

I am of the view that there will be a significant drop in global markets in 2021, most likely between April and September. Market factors considered in my prediction are:

• Economic damage globally, caused by the ongoing mismanagement of the pandemic by various governments.
  
  
• Global political tensions across major nations.
  
  
• Global trade tensions, some of which emanate from the above political tensions.
  
  
• Social unrest in major economies, possibly triggered by underlying social tensions between the haves and have-nots.
  
  
• Economic structural change caused by the introduction of technology and climate change.
  
  
• Record level of global government debt.
  
  
• Record levels of domestic debt across the developed economies.
  
  
• The fact that the ongoing global expectation of, let’s say, annual growth of 3% is actually unsustainable.
   
• Overall extremely poor economic management by governments in trying to sustain their power as opposed to dealing with economic challenges that only become more complicated.