Superannuation industry in Australia
It’s a retirement savings scheme for employees and is mandatory that employers contribute 9.25% in 1st July 2013 of the employee earnings into a superannuation fund. Superannuation however is not compulsory for most self-employed. superannuation fund objectives and its purpose is outlined in -The Australian Prudential Regulation Authority (APRA), and its core purpose defined by the Commonwealth Regulator for superannuation is the essential provision of benefits after or on r the employees retirement, attaining his or her age 65 or earlier death and the benefit being the members accumulated savings.
However, superannuation seems to be understood poorly by the wider society. Most people have misconceptions of what actually superannuation is, the types and the benefits of building wealth through superannuation, how it operates. In cases of, disengagement by members from their funds, poor communication from funds and people losing track of their accounts this however brings the negative picture as viewed by some people of superannuation. In most cases people can choose the fund that they want to contribute to and unless restricted by a federal legislation or awards, will take the funds to their future jobs.
Types Superannuation funds
Superannuation funds operate as trusts funds with trustees being responsible for the prudential operation of their funds and in implementing and formulating strategy for investment .specific obligations and duties are coded in the Superannuation Industry (Supervision) also other obligations are the subject of general Australia trust law. Trustees are liable under law for breaches of obligations. Superannuation trustees have, an obligation, interalia, to ensure that their monies are invested with the consideration required to liquidity and diversification.
Superannuation Industry (Supervision) Act 1993 that is largely related to investments in assets of employer , other than few very specific provisions funds are not subjected to any asset investment exposure flaws or requirements . There is no minimum rate of return requirements, nor government minimum benefits guaranteed. Though there are some minor restrictions on the use of derivatives, borrowing and investments in property and the shares of employer fund sponsors.
Therefore superannuation funds usually tend to invest in a wider variety of assets with a mix of risk and return, duration and characteristics. With the recent investment performance of superannuation funds compares favorably with alternative assets such as bonds within a 1oyr period.
The Australian superannuation industry segments.
The superannuation industry in Australia is segmented into 5 main categories these are:
1. Industry funds
This is the regulated superannuation entities that for a period of time has provided for employees working in the same or group related industries. Many industrial funds...