How Safe is Your Super & Why get an SMSF? – MUST READ

We have stated for many years now that there is simply no more important investment vehicle to have in your control and fully diversified than your superannuation.  Simply put, you don’t get to decide what the markets are doing on the day you retire. Last week we got a salient reminder from the government that having your super in your control, in an SMSF, may also be critically important as they have super in their sights….

Back in 2015 we wrote “THEIR” HANDS ON YOUR SUPER where the key quote from publisher Kris Sayce said:

“Now super is a ‘national asset’. It’s not surprising that politicians and lobby groups have given it that new identity.

After all, the total value of Aussie super now runs to over $2 trillion.

That’s enough to pay off the federal government’s debt six times over. The trouble is, right now, the money is just out of reach.

Making it even harder is the fact that more than a quarter of all super money is in self-managed super funds.

That’s why the super industry is backing the government’s plans for more rules for super. They want the rules to be so harsh that people will ditch SMSFs and flock back to mainstream funds.

That way the super fund industry can slice off their fees, and gain favour with the government by shifting capital where the government wants — infrastructure, nation building, and so on.

Make no mistake. This is about a wealth grab. You’ll end up working longer, but getting less in retirement as the government grabs your super and replaces it with a new Aged Pension.”

Fast forward to last week August 2022, and we have this from the Australian Financial Review:

“Federal Treasurer Jim Chalmers has laid down a new agenda for the $3.4 trillion superannuation sector that he hopes will steer part of its vast pool of capital toward nation building investments in housing and clean energy.

Dr Chalmers, claiming victory for Labor in the super wars, told a roundtable of business leaders in Sydney overseeing $3 trillion in investment capital that super played a role “investing in our national priorities” and “addressing some of our most formidable economic challenges”.”

The very architect of the compulsory superannuation scheme in Australia, Paul Keating, who famously slipped at the time that one day the government could use it, was front and centre at this round table. Again from the AFR:

“Mr Keating took aim at the super funds, warning them not to take their social licence for granted. They should be thinking about how to facilitate access to housing rather than simply chasing returns by investing in offshore companies, he said.

“This is a society that can’t house its own children,” Mr Keating said. “If super funds just think they can go buy tech stocks in America and highways in Italy, they’re going to run into trouble. Without being heavy-handed, there is a requirement of the funds to look at social opportunities.””

But its not just housing, they have far broader plans…

“Mr Keating and Anthony Pratt, executive chairman of Visy, argued that superannuation funds should also be investing more in corporate debt, alongside major banks, to diversify their portfolios and support Australian credit markets.

Dr Chalmers pointed to a lack of spending in the aged care sector and said he would “contemplate what, if any, further role for super there is in that”.

Amid renewed debate about the role of superannuation in the economy, Dr Chalmers said the government is working on a legislated purpose for super. He said this would prevent policies like the previous government’s early withdrawal scheme.

A codified purpose for super will put a focus on whether providing an income in retirement needs trustees to maximise returns, and how much they should diversify into lower-yielding assets.”

These are barely nuanced statements.  Whilst avoiding “being heavy-handed” there is a clear agenda of taking control and they are firmly on record saying super funds should be less concerned about maximising your wealth and more about helping fund the government out of the debt trap they got us all into.

Let’s be clear too, this is not exactly a world first.  Back in 2016 we wrote CONFISCATING YOUR SUPER where we gave details of 8 instances of this happening previously around the world.

The other key consideration right now is the level of extortions in equities and property after what has been an unprecedented easy money experiment (14 years in the making) both through central bank monetary policy and government fiscal stimulus. The big super funds are heavily geared toward equities at a time of huge uncertainty.  You could confidently bet they have very small, if any positions in precious metals and those positions would be in ETF’s not physical. You then have 2 layers of separation and third party risk between you and your hard, uncorrelated, safe haven asset.   If you want crypto in your super you pretty much have no choice at all, period.

Self Managed Super Funds (SMSFs) have arguably never been more important to consider than right now.

• You have complete control of your investments and retirement nest egg
• Quite clearly, they are contrary to the government agenda and you could expect the rules for entry are only going to get harder.  It would be nigh on impossible for any retrospective banning of them so being ‘in’ before it’s too hard could be critical
• You can hold physical precious metals bullion and crypto – neither of which have any third party risk at a time when the whole interconnected financial ‘markets’ house of cards looks positively shakey.
• Gold and silver are truly historically uncorrelated to financial markets and hence offer REAL balance in a portfolio.  Too many ‘balanced’ funds are comprised of different but largely correlated assets. If they are all down when you retire there is nowhere to go. The images of the ashen faced retirees during the GFC coverage will not be forgotten
• Unlike property, another hard asset, gold and silver are highly divisible and liquid.  We have many a retiree coming in regularly to sell another little bar to live on.  You can’t sell a little bit of your property investment.

To learn more about how easily you can buy gold, silver, platinum and cryptocurrencies in your SMSF visit here or read our brochure.

Gold & Silver Standard Insights this afternoon will see Wholistic Financial Solutions’ CEO and Founder, Catherine Smith, join us to discuss today’s article, its implications, and how easy it is for you to set up your own SMSF.

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