Super takes a dive: Economy roundup

The value of superannuation funds went backwards by an average 5% in January as market volatility takes its toll on Australians’ retirement savings.

SuperRatings benchmark median balanced super index fell 4.97% in January 2008, leaving super funds up by just 2.17% for the 12 months to January.

SuperRatings managing director Jeff Bresnahan says last month’s sharemarket correction has flowed directly though to the bottom line of super funds.

“The double digit results over the last four years have not come without risk, and every trustee in the country is aware of the need to ensure these risks do not get out of hand,” Bresnahan says.

Balanced funds that managed to perform best over the 12 months to January include MTAA Super – Balanced, with an 8% return, Westscheme – Trustee’s Selection on 6.2% and HOSTPLUS – Balanced on 5.7%.

Falling financial stocks, which make up a big proportion of the Australian sharemarket, are no doubt a big part of the reason why super funds have taken a hit.

NAB chief executive John Stewart has taken the unorthodox step of warning the Reserve Bank of Australia against overusing the “blunt instrument” of interest rates to rein in inflation.

Stewart told The Australian that it was unlikely banks would have to implement more interest rate rises of their own to make up for increased borrowing costs on international financial markets, and said the RBA should be aware of the effect rate rises have on the diverse Australian economy.

“The trouble is that Australia is not one economy – in places like WA it won’t make a jot of difference,” he said.

One thing that might keep the RBA’s hand off the lever is a sign that wages aren’t about to break out – something that the economy has more or less avoided to date.

New data released by the Australian Bureau of Statistics today points to a possible explanation – significant underemployment in the ranks of part-time workers.

Of almost three million part-time workers in Australia, 19% want to work more hours and 57% would like to work full time.

Of those workers who want more hours, 91% said they were ready and able to start working longer hours now if given the chance.

On the markets, at 12.40pm the S&P/ASX200 was trading at 5611.8, 0.9% up on Friday’s close, while the Australian dollar is worth US92.34c, down from US 92.42c on Friday.