Prime Minister Paul Keating resorted to typical hyperbole when he referred to “”donkeys” in the superannuation industry who invest only in blue chip shares. He called on them to invest less in the top 50 stocks and more in stocks lower down the table, especially of new companies in hi-tech areas.
Mr Keating has a point, but only up to a point. Superannuation is primarily about providing secure retirement incomes. Any spin off in extra savings and investment in new industries is incidental to this. Of course, it does not take a donkey to realise that investment in green chips is more risky than blue-chip investment and fund trustees will be held accountable for losses. That said, it has often been the case in Australia’s stock market history that in any decade the performance of the top 100 companies is worst than the performance of the next 100 down. Some stocks are clearly unsuitable for super. However, it should not be beyond the wit of the funds and the Government to devise a scheme whereby risk can be spread sufficiently to enable more investment into smaller companies which would often turn out more profitable than the blue chips … the high flyers would more than compensate for the crashers.
While looking at superannuation, the Government should concentrate on retirement income. The rules should favour those who take annuities and should not permit early use of funds for housing and other purposes; that defeats the whole aim of superannuation.