Don't panic about super losses

THE chief of Australia's peak superannuation body says people should not panic about the dive in global sharemarkets.

Don't panic about super losses

THE chief of Australia's peak superannuation body says people should not panic about the dive in global sharemarkets.

The Australian stock market suffered its worst one-day fall in more than 10 years on Monday, losing $96 billion on fears a US recession will hit global economic growth.

"It's very important people don't panic,'' CEO of the Association of Superannuation Funds of Australia Pauline Vamos told local ABC Radio on Tuesday.

"Superannuation is a long-term investment, it's there to fund our retirement and we are going to retire for a long time.''

The share market is cyclical and will go up and down during that time, Ms Vamos said.

"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.''

Super investors had enjoyed tax benefits both when entering a super fund and exiting, so a majority of people who had been investing for a while were really coming from ``a very, very high base''.

"We have had double-digit figures for the last four years and so yes, there is a bit of dip.

"But again, because of compound interest, you have got a high base from which that value will go down,'' Ms Vamos said.

"So you still have that strong base for the value to go up again.''

Superannuation funds invested in a broad range of assets and a lot of people were in so-called balanced portfolios.

"So whilst you can see the market tumbling there are different assets that will have different values at different times.

"And because superannuation funds do invest in a lot of different types of assets they can really survive really well in times of the market sliding as it is at the moment.''

Ms Vamos said while many super fund managers would be adjusting the amount of money they have in the market, they would hold on to asset types that have performed well in the past and may even increase the size of their holding in particular stocks.

"There are a lot of bargains out there,'' she said.

"So you can go in and buy a really good quality company if you like, or part of company, at a really good rate.

"That's because a lot of people have been forced to put shares on the market to pay margin loans (loans to buy shares), so people are looking at the bargains there.''