The Australian’s Money Cafe: Time for industry funds to bankroll a ‘super school’
Industry funds are the winners in super, but they do little to help millions of members understand the system. It’s time for that to change.
Changes unleashed in super this week are ringing alarm bells. How will they work? Will there be more?
As experienced investors consider the fallout from changes to ‘caps’ or ‘unrealised gains’ or ‘indexing’, it’s worth keeping in mind many super savers have no idea what these terms mean.
Yet every Australian – by law – must contribute $1 for every 10 they make into a super fund.
At the same time, financial literacy is getting worse. The benchmark ‘HILDA’ survey in 2022 discovered the rate of financial literacy has been declining across all age groups since it last did the exercise in 2016. The decline was most notable among people under 35.
The big end of town for super is dominated by industry funds. These funds are heavily skewed towards younger investors but they are rarely seen helping members learn the ropes in finance and investing. Bankrolling education in schools and colleges instead of sponsoring sports events would be a lot closer to fulfilling the stated mission of big funds.
This week on The Australian’s Money Cafe podcast we meet Caroline Stewart, a former UBS corporate lawyer who is now the CEO of the Ecstra foundation, which is the key organisation for financial literacy and runs off the fines paid by banks and insurers at the time of the Hayne Royal Commission five years ago.
In this week’s show we cover:
• The changes to super
• How young australians are learning about investment
• The secrets of compounding interest and indexing
• Why Warren Buffett loves index funds
Questions for the podcast always welcome to moneycafe@theaustralian.com.au
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