Smart Investing
-
The Chinese calendar says this is the year of the dragon. Less auspicious perhaps but for Australian investors this is shaping up as the year of fixed income.
-
By taking a few simple steps, super fund members can both boost their retirement savings and legally minimise tax on their super – for themselves and their beneficiaries.
-
Self-managed super funds seem set to remain by far the preferred superannuation choice among higher-balance members – particularly those in retirement.
-
This is a question that many investors are, not surprisingly, asking themselves. But what might surprise some investors is that the answer is not as elusive as it may at first seem.
-
Changes to the ASX operating rules to allow fixed income Exchange Traded Funds (ETFs) to trade on the Australian market will open a new means for investors to efficiently, conveniently and inexpensively diversify their investment portfolios.
-
- Podcasts
News & Commentary
Default fund - by choice 19 Jul 10
An enduring myth regarding super is that those who are in a default fund are probably “disengaged” with their super.
In reality, many members would have concluded that their employers’ default fund is appropriate for their circumstances. In other words, they have thought about their superannuation and made a decision.
This decision-making certainly does not equate to being disinterested in their retirement savings.
Ross Clare, director of research for the Association of Superannuation Funds of Australia (ASFA), picks up this theme in the latest issue of the association’s magazine Superfunds.
In his article headed, A Lifetime of Choice, Clare writes: “Some commentators have asserted that 80% ound members do not exercise fund or investment choice and, they say, it makes sense not to offer such members investment choice or ‘bells and whistles’ options.”
Clare argues that researchers have to ask the right questions otherwise misleading conclusions can be reached about a member’s degree of interest in super.
“For instance, data on the incidence of people changing fund or investment options tells you very little about whether people generally chose the fund or investment option in the first place,” he adds.
“It would be just as misleading to say that because only a small proportion of people move house every year, they do not care where they live.”
Clare points to the findings of a survey by researcher brandmanagement that was commissioned by ASFA to try to quantify the level of member engagement. In May, the researcher surveyed 600 people in the workforce aged 25 to 69.
And significantly, researchers asked those participating why they had chosen their super funds.
Almost 28% oespondents in a default option had felt it was the best option for them and “went there by choice”.
So much for disengagement.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
To receive this column by email each week, register with Smart Investing.
What can I do next?
- See Prices & Performance data for Vanguard funds
- Learn more about our Managed Funds up to $500,000
- Lean about our Managed Funds over $500,000
- Discover our Exchange Traded Funds
- Order or download a 2009 Index Chart
- Contact Client Services
