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Super members urged not to panic

The stockmarket rout has wiped an estimated $30 billion from Australian superannuation funds over the past six weeks, but industry leaders have urged members to ''keep the faith''.

The stockmarket rout has wiped an estimated $30 billion from Australian superannuation funds over the past six weeks, but industry leaders have urged members to ''keep the faith''.

THE stockmarket rout has wiped an estimated $30 billion from Australian superannuation funds over the past six weeks, but industry leaders have urged members to ''keep the faith''.

Australian Super chief executive Ian Silk said the savage losses of the past week needed to be put in context of steady gains of about $120 billion over the past year.

''All investors feel losses far more keenly than they appreciate gains, so people will say they have lost 3 per cent in a few weeks, but forget they gained almost 11 per cent over the previous year,'' he said.

''People don't rush to sell their houses when property prices fall and they need to take a similar long-term approach to superannuation.''

He said many of Australia's biggest superannuation funds had already moved to reduce exposure to the skittish US equity market, amid concerns of a double-dip recession.

''While the US represents around half of the global equity market, we have a substantial allocation in emerging markets including China, where we expect stronger growth and less volatility,'' Mr Silk said.

But for those who left the workforce in the past five years, the recent market turmoil is expected to further erode retirement savings that had already been battered by the global economic downturn of 2008.

''The people who will be really hurt are those already spending their super, it could be a disaster for some of them,'' said Garry Weaven, chairman of investment group Industry Funds Management.

''But for those who are years away from retirement, they need to be philosophical and understand that markets can be volatile, but in the long term they should be fine.''

The Association of Independent Retirees national president John Wenban said many self-funded retirees were anxious, but cautioned against panic.

''I think at the moment it is all theory, it is not actual money,'' Mr Wenban said.

''It's a 4 per cent tumble, which is significant, but come Monday it could be up 1 per cent and before you know it, it could be up by 10 per cent again, which is where we were in July after the GFC in 2008.''

Self-funded retiree and former Deakin University dean of aquatic science Rod Carter estimated the paper value of his shares had slumped by about 20 per cent on Friday, but is not overly alarmed.

''Some self-funded retirees have come to me and are quite panicked about it, but I've had to say to them, 'For god's sake, don't sell, just hang on,''' he said.

He said many self-funded retirees regretted selling shares in 2008. He said those that relied on selling shares for income, rather than dividends, would be most affected.

''It is going to be hard and there will be some self-funded retirees who will finish up getting government assistance through Centrelink. That will hurt because they pride themselves as being self-funded,'' he said.


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