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Date Published : Thursday, January 24, 2008
With the world's markets in turmoil, superannuation policies have taken a big hit but is it bad enough for people to worry about?
On January 21st, the Australian stock market suffered its worst one day slump for over ten years, wiping an estimated $96 billion from the industry - the majority of it affecting super funds.
However, the message from within the financial industry is that people should not panic, with the vast majority of funds designed to cope with the occasional big hit.
Chief executive of the Association of Superannuation Funds of Australia Pauline Vamos told local ABC Radio: "It's very important people don't panic.
"Superannuation is a long-term investment, it's there to fund our retirement and we are going to retire for a long time.
"The one thing we do know about the market is over the longer term, for the vast majority of people, it does provide a good return.''
Superannuation is a means of saving for retirement with the added bonus of tax concessions. It is not an asset class like shares or property but rather a vehicle offering tax breaks when you invest in these assets. If consumers organise superannuation properly, they should be able to enjoy life after they stop working.
The high interest nature of many super funds means that any losses will be recouped within a reasonably short space of time, allowing for a healthy retirement allowance.
Without tax breaks and compulsory contributions from employers, few Australians would have enough retirement income to ensure an adequate lifestyle.
While the markets rumble and the news reports are negative, it is human nature to worry about the state of finances. However, the long-term idea behind super fund should ensure the worries go away for now.
Australian savings accounts compared and reviewed.
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