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- ASIC issues warning to SMSFs on crypto
- Superannuation needs to be part of draft National Plan to End Violence against Women and Children 2022–32
- Size and frequency of voluntary super contributions rises
- Cbus Super increases investment options for members
- Super assets to triple as number of funds dwindle
- Investment funds rise across the board
- Proxy advice changes criticised by industry
ASIC issues warning to SMSFs on crypto
The Australian Securities and Investments Commission (ASIC) has warned Australians against switching from retail and industry super funds to self-managed super funds (SMSFs) so they can invest in a ‘high return’ portfolio.
The regulator notes that SMSFs are being targeted by an upsurge in marketing recommending they invest in cryptocurrency assets, “a high risk and speculative investment.”
ASIC is reminding anyone considering transferring their super out of a regulated fund into an SMSF to consult a licensed financial adviser before they do so.
ASIC also reminded people that any SMSF needs an investment strategy: “When developing and reviewing your investment strategy you need to document how your fund’s investments will meet your retirement goals having regard to diversification, the risks of inadequate diversification, liquidity and the ability of the fund to discharge its liabilities.”
The full text of the warning can be found here.
Superannuation needs to be part of draft National Plan to End Violence against Women and Children 2022–32
The Australian Institute of Superannuation Trustees (AIST) has called on the federal government to consider the superannuation balances of women in its draft National Plan to End Violence against Women and Children 2022–32.
“This plan is an important step towards addressing the crippling effects of violence against women on their financial security,” AIST CEO, Eva Scheerlinck said, highlighting the impact of coercive control in violent relationships during the early release of super scheme
“Many women [were] coerced into accessing their super or having it fraudulently accessed by their domestic partner [during that time],” she said.
The impact of being unable to work when experiencing periods of family violence also needs to be included and addressed in the new plan.
Meanwhile, the consultation period for the draft National Plan to End Violence against Women and Children 2022–32 has been extended until 14 February. This follows a backlash against the government initially providing just two weeks for interested parties to provide feedback.
Size and frequency of voluntary super contributions rises
Members of AMP Superannuation products are 27% more likely to be making voluntary contributions to their super than they were pre-COVID, according to an analysis of AMP’s nearly one million super members.
The size of these contributions is also 28% larger than pre-COVID levels, and equates to an extra $296 contribution to super over the three months to September 2021.
AMP Super members who made a withdrawal under the government’s early release of super scheme (EROS) were 14% more likely to be making voluntary contributions to their super than they were pre-COVID.
A higher number of women are also choosing to make voluntary contributions since COVID-19, and their contribution rates are growing 6% faster than men.
“What is pleasing is that following the initial COVID period we have now seen higher levels of engagement with super and members that participated in EROS seeking to restore their balances,” AMP’s head of technical strategy for superannuation John Perri said.
“More Australians are accessing education resources and making active choices with their super through voluntary contributions when they’re able to.
“It’s also encouraging to see more women making voluntary contributions and taking action with their super.”
Cbus Super increases investment options for members
The $67 billion construction industry super fund Cbus will launch six new investment options in February as part of its efforts to grow into a $150 billion fund.
The six new investment options will cover the risk spectrum and add to the fund’s existing five options. The new options will include a new Growth Plus option, a low cost Indexed Diversified option, and options for Overseas Shares, Australian Shares, Property and Diversified Fixed Interest.
“We do see that a market, particularly in the corporate space, is there for a wider range of choice options,” Cbus Super chief investment officer Kristian Fok said.
“That’s why we have spent the last twelve months carefully constructing and testing our new menu of options for members.”
Late last year Cbus also announced it had signed a memorandum of understanding to complete a merger with NSW energy industry super fund EISS Super in 2022.
Cbus is also in the process of merging with Media Super.
Super assets to triple as number of funds dwindle
Total superannuation assets are expected to almost triple to $9.2 trillion over the next 20 years according to modelling by Deloitte Actuaries and Consultants in its The dynamics of superannuation in Australia report.
The modelling reflects the legislated increases in the SG rate from 10% at July 2021 to 12% by July 2025. However, the report points out that the projected asset growth would slow if superannuants are forced to draw down greater than expected proportions of their retirement savings in a lower return environment.
The report also forecasts continuing consolidation of funds and more mergers over the next five to 10 years.
“We expect that funds which fail to reach scale or underperform relative to their peers will struggle to survive unless they can transform their businesses quickly. The member outcomes assessment and product heatmaps have given APRA expanded powers in relation to underperforming funds, which has already resulted in some additional industry consolidation,” Deloitte said in the report.
Deloitte expects this merger activity will result in an industry comprised of a “modest number” of very large funds that will be able to increase their investments and stake in global opportunities and private equity due to their size.
Investment funds rise across the board
Funds under management in master funds rose by 19.2% to $990.1 billion over the 12 months to September 2021, according to Plan For Life’s latest analysis of the sector. Within master funds, wraps rose by 28.7% to $525.9 billion while platforms and master trusts also increased by 9.5% and 11.3% respectively.
Inflows into master funds rose by 9% while outflows dropped by 4.1%, which resulted in a net funds flow of $21.5 billion over the year.
Retail managed funds rose by 19.1% to $1,081 billion, over the same 12 months, also buoyed by strong performances in underlying investment markets.
Wholesale investment funds rose by 32.4%. However, that figure included a large chunk of AMP’s previously internally invested funds following the demerger of AMP Capital. When those funds are excluded, the annual increase in wholesale funds was closer to 20%.
Proxy advice changes criticised by industry
The super and investment industries are concerned that proxy advice regulation rushed into law at the end of 2021 will not necessarily be a positive outcome for shareholders or superannuation funds.
The new regulation requires proxy advisers to have an Australian Financial Services Licence to provide advice to Australian institutional shareholders from 7 February 2022. (Proxy advisers are firms or consultants that provide shareholders with research, data and recommendations on how they should use their proxy votes.)
“In Morningstar’s view, these changes are flawed as they place undue pressure on a sector that has been effectively highlighting corporate issues, helping institutional clients identify weaknesses and mitigate risks, and ultimately improving investor outcomes,” Morningstar ESG analyst Erica Hall explained in a recent analysis of the changes.
Proxy advisers will also be required to be independent of their institutional clients by 1 July 2022.
General manager of advocacy at the Australian Institute of Superannuation Trustees (AIST) Mel Birks said the changes will drive up costs for proxy advice that will, in turn, drive up costs for investors and superannuants.
“The requirement that the advisers not be owned by their clients is unnecessary, as the advice given is independent. The critical independence is between the proxy adviser and the companies they assess, and this is already in place,” Birks said.