iscover Iran conflict ‘will have little impact’ on Australian super system, SMC says
SuperOur national superannuation system is built to withstand short-term shocks, even as share markets experience volatility in the wake of the US-Israeli strikes on Iran, advocates have said.
In a statement, advocacy group Super Members Council (SMC) notes that geopolitical instability and subsequent market movements will understandably cause concern for Australians.
However, it said, Australia's super system is built to withstand short-term shocks and deliver strong returns for members over decades, not days or weeks.
Super has, SMC said, historically performed strongly over the long term, despite fluctuations in the equity markets, with profit-to-member funds returning over 7.5 per cent a year on average over the last decade to December.
The group’s analysis of significant market downturns shows balanced options experience a fraction of the impact seen in equity markets and make speedy recoveries, it said.
SMC executive manager of strategy and insights Matt Linden said: “Australia’s super system is built for the long term, and history shows it is well placed to weather periods of volatility and uncertainty.”
“For most working super fund members, this week’s market movements will have little impact over the medium to longer term,” he said.
“For current retirees or pre-retirees heading towards retirement soon, money that remains in super for many years enables short-term losses to balances to bounce back,” Linden continued.
“If you’re thinking about moving your money during a short-term market downturn, you could miss out on a recovery in value when markets cycle upwards again.”
Super is typically a highly diversified investment, with most Australians’ super invested in balanced options that span a range of assets and geographies. This, the group said, moderates the impact on members’ super returns from changes in any one stock market.
Australians with retirement savings in super are part of a system that is designed to navigate short-term shocks to the Australian and other economies through investments in infrastructure, property, private equity, cash, bonds, and other assets typically not listed on global share markets, the group outlined.
As such, if super fund members switch their super savings to cash or other defensive assets after markets have fallen, it can “potentially crystallise losses and mean people miss out on market rebounds”.
Jerome Doraisamy
Jerome Doraisamy is the managing editor of Momentum Media’s professional services suite, encompassing Lawyers Weekly, HR Leader, Accountants Daily, and Accounting Times. He has worked as a journalist and podcast host at Momentum Media since February 2018. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
