Super savings savaged
AUSTRALIA's major super funds have suffered their biggest monthly fall in value since the arrival of compulsory superannuation 16 years ago, dragged down by battered local and international sharemarkets.
AUSTRALIA's major super funds have suffered their biggest monthly fall in value since the arrival of compulsory superannuation 16 years ago, dragged down by battered local and international sharemarkets.And returns on Australia's 30 million super accounts may not improve in the first months of the financial year, with shares taking another dive amid warnings of billion-dollar losses at two of Australia's biggest banks.In the latest bad news bulletin from the banking sector, ANZ said yesterday it would set aside $1.2 billion to cover expected losses stemming from worsening economic conditions in Australia and New Zealand, and its exposure to failed companies such as Centro Properties Group, Bill Express and Opes Prime.The news came three days after NAB revealed it expected to lose more than $1 billion on investments linked to the troubled US mortgage market.The ANZ announcement sparked another day of heavy selling on the sharemarket, with sagging bank shares leading the benchmark S&P/ASX200 back below 5000 points to finish at 4922.1.The latest shares sell-off will add to an already gloomy picture emerging from the nation's major super funds.According to industry rating group SuperRatings, which tracks the performance of major super funds, the median balanced super fund lost 6.39% over the 12 months to June 30. June was the worst month since compulsory super began in 1992, with the median balanced fund losing 3.9%. Industry funds fared better than the rest, with an average one-year negative return of 5.78%, compared with retail funds at -9.84%, according to figures from Industry Super.The best performing super fund, Vision Super - Balanced Growth, lost 1.7% for the year to June 30, while Legg Mason Corporate MasterTrust fell 15.9% over the same period.Another six months of negative returns could not be ruled out, said senior fund manager Angus Gluskie, of White Funds Management. "I don't think we've seen the bottom of the market," he said, noting higher inflation could dampen profits further.The banks' woes prompted a warning from Treasurer Wayne Swan, who said that Australia was "not immune" to events in global financial markets. He revealed that he and Prime Minister Kevin Rudd had at the weekend sought reassurance from regulators, including the Reserve Bank, that Australia's major financial institutions were in sound health.When asked whether poor performances should be reflected in remuneration packages of executives and boards, Mr Swan said it was important that senior bank figures "are held accountable for the decisions that they take".But Australian Shareholders Association chief executive Stuart Wilson said it would be some time before shareholders could demand accountability from bank chiefs, with the annual meeting of the ANZ in December and the NAB meeting in February next year.Retail shareholders had been concerned for some time as they watched remuneration levels for bank chiefs spiral out of control, Mr Wilson said.ANZ chief executive Mike Smith said yesterday the Australian economy would continue to slow over the next 18 months. On Friday, NAB chief John Stewart warned that the economic gloom emanating from the US mortgage crisis was not nearly over.
Share this article and show your support