Pensions

Retirement savings accounts

A broken system?


Here at Goldsmith Money, we like to question government policies which force the average person to part with his or her money – even if the politicians tell us it is in our ‘best interest’.

In a previous blog we have put forward reasons why – We should scrap compulsory retirement savings systems – now! We thought it time to throw some more fuel on this fire.

In a recent article by Money Management, they reported that the 5 year average annual return for Australian superannuation funds was now sitting at 3.7%. This was according to the latest data released by the Australian Prudential Regulation Authority (APRA).  A link to the article is here.

I make the assumption now that these returns would be indicative of diversified pension accounts world-wide, which general focus on equity and fixed income asset classes only.

This annual rate of return, 3.7%, is barely keeping pace with the headline inflation numbers (don’t get me us started on actual inflation). It is also likely that these workers were paying highly interest rates on their home loans. So again I ask the question –

Why are the workers of the world being forced to direct circa 10% of their salary to these superannuation and pension accounts?


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Isn’t the most prudent retirement strategy one that ensures home ownership in retirement?

Wouldn’t that final circa 10% of salary and wages be better off directed to paying down home loan debt quicker? There is no investment risk paying down debt.

Who is really benefiting from the superannuation and pension systems?

We would love to get your thoughts, ideas, answers and comments below.

GOLDSMITH.




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