Leave Well Alone
A fear of government tinkering is fueling a huge level of distrust in the superannuation system, with the large majority of Australians distrustful or unsure of whether the Federal Labor Government will leave super alone.
CoreData-brandmanagement’s latest Investor Sentiment Index, which surveyed almost 900 Australians, has shown nearly three in five Australians (59.8%) do not trust the Government to maintain the current legislation around super. A further quarter (23.2%) say they don’t know whether or not they trust the Government to leave super alone.
Adding to this, almost half of Australian investors (49.4%) say that the Government is not providing a climate which is good for investment and one third do not know if this is the case (32.9%). Less than one in five (17.7%) believe the Government is providing a climate which is good for investment.
The findings help explain the recent exodus by investors from existing investments. Three times as many investors said that they had withdrawn money from existing investments in Q4 2010 when compared to Q3 2010.
A considerable three in five investors (61.2%) withdrew money from their investments in Q4 2010, compared to just 21.3% in Q3 and 20.9% in Q2 as shown in the chart below.
Chart 1: Outside the regular normal superannuation contributions you make, have you done any of the following in the last 12 months?
But the findings suggest this money is going to remain in cash – at least in the short term.
Only one in five (21%) people say they are likely to invest new money in existing investments in the next three months, on par with last quarter, and even fewer (14.9%) intend to purchase a new investment product/invest money directly in new equities.
Meanwhile, the proportion of investors looking to rebalance to cash in the next quarter remains relatively high, with 28.1% saying they will rebalance towards the asset class, up slightly from 25.3% in Q3 2010.
The Government’s controversial proposal to create a fifth pillar of the banking system using the credit unions and building societies has widespread support from the public, with three in five Australian investors (61.8%) saying they support the idea of the provision of Government wholesale funding to credit unions and building societies to make it easier for them to compete against the big banks.
Chart 2: Do you support the idea of a fifth pillar within the Australian banking system?
Only 15.4% of investors opposed the idea, while a further fifth (22.8%) were unsure.
One Comment on “Leave Well Alone”
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Rob says:
It isn’t just the current government that can’t leave super alone. No government can keep their mits off it and given its importance to national savings, it is a disgrace how successive government change the rules incessantly, creating uncertainty and distrust.