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Superfunds and members drawing down

Question

Hi, 2-3 months ago, there was much discussion in the media about how certain industry super funds could be in some strife because many of their members might apply to withdraw some of their funds under the gov't relief scheme. Have these concerns been put to rest, or are they still there? - Submitted by Vidana

Answer

Hi Vidana,

The concerns around ‘liquidity’ where the super funds would have to sell it liquid assets to cover the redraws because of its ‘overexposure’ to non-liquid assets has abated. But the issue is more that some industry super funds have valuations of their Real Estate asset that are too high and that a derating is coming.

The other point is the rapid rate of withdraws and the long-term effects. People will be significantly worse off over the long term for withdrawing from Super as much as $250,000 worse off over the life of the investment in some instances. The other is people are actually wiping out their full super balances meaning they have no saving for retirement at all.  

We are watching the super-withdrawal plain with interest

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Evan Lucas
Evan Lucas
Chief Market Strategist