And, crucially, do you know what your fund invests your money in?
If you answered ‘no’ to all or even some of these questions, you are not alone. Having interviewed several thousand people over the almost 15 years I’ve been a broker and broker adviser, experience would suggest that most people do not know the answers to these questions. Unless employees actively make voluntary superannuation contributions, they are not likely to think too much about it.
I have always thought Cbus Super was a smart initiative – a fund for employees within the building, construction and allied industries, they invest in property projects across the country, not only generating a return for members in a sector that they understand, but also creating jobs for their members.
Similarly, I have heard rumours of super funds planned which specifically target residents of regional and rural communities, with the objective of reinvesting a minimum percentage of funds under management back into projects within these same communities.
The opportunity to actively engage with communities at grassroots level to identify worthwhile local community investment opportunities would no doubt generate significant interest. On the surface, it seems that despite the fact that millions of dollars are drained out of regional and rural Australia every day, there is still such a disproportionately small percentage of these funds which are reinvested in those communities.
Increased employment opportunities is one of the first local benefits that come to mind, but this is just one of many far wider-reaching benefits.
Working with farmers who feel distressed about debt through a debt restructuring program is one possibility. It would have a flow-on effect of maintaining higher levels of local ownership of agricultural land. With increased ownership of agricultural land passing hands into those of international investors, Australia is not only losing ownership of the land itself, but also the resources and food security that accompany it.
A second opportunity of supporting renewable energy projects may be something to consider, especially as Australia is blessed with an abundance of solar and wind resources. Coupled with industrial scale battery technology, the cost of electricity for regional and rural communities could be managed better, bringing prices down considerably.
I doubt there will be any trouble identifying opportunities for investment.
Transparency would seem to me to be the real key here. If local members have representation on regional investment committees, and the funds management can be overseen by an independent trustee, this would place any such superannuation fund at a competitive advantage compared to its peers. Coupled with a transparent and simple fee structure, the initiative would be a super idea.
Troy McErvale is the founder and managing director of Freedom Home Loans and My Personal Lender, a combined mortgage broker and mortgage management business in Australia started in 2001. Since 2010, the company has offered an expanded service to include mortgages for foreign owners of US property, as well as US property consulting services to high net worth clients.