USE OF SUPERANNUATION FUNDS
Employers are required to pay superannuation contributions to their employees superannuation funds based on the remuneration deemed to have been paid to the employee. The rate applicable is currently 9.5%. Effectively, 9.5% of the national payroll (less the 15% contributions tax, and 15% tax on earnings) has to be invested somewhere. One has to ask questions :

  • How much goes into new investment ?
  • How much goes buying existing shares at higher prices that reduce the price/earnings ratio ?
  • How much investment goes into overseas enterprises ?
  • How much investment is required in Australia and how does that compare to the 9% contribution available ?

    • There is pressure on fund managers to show "immediate" returns/growth and outperform their competitors. Short term gains are not necessirily reflected in best long term outcomes. Legislation and "picking winners" do not necessarily go hand in hand.

    Prior to 1984, superannuation funds had to invest at least 30% of the assets in public securities, and at least 20% had to be in in Commonwealth securities. Arguments for removing this restriction were part of the Campbell Report into financial deregulation.

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