Treasury Head Warns Against Self-Managed Super

Dr. Martin Parkinson has issued a warning against self-managed super funds, saying that it carries much greater risks.

The federal Treasury head said many self-managed super funds offer flexibility and sometimes, great returns but there are also risks attached to these. Dr. Parkinson added that SMSFs have become so prevalent that it can affect the integrity of Australia’s superannuation industry.

In his appearance at the Association of Superannuation Funds of Australia, Dr. Parkinson said the industry should practice more transparency in light of SMSFs. He added that SMSFs play an important role in the market because it provides investors an opportunity to have control of their investments.

Dr. Parkinson also said that SMSF trustees should have more accountability requirements.

Former Prime Minister Paul Keating, meanwhile, criticized super fund managers, saying they are investing too much in the stock market. Keating is the architect and the brain behind the superannuation system.

Keating cautioned against unrealistic high returns because it may push fund managers to be too risky. He also said superfund contributions should be increased from 12 to 15 percent. He, however, said the increase should be invested in long-term and government-run funds.

Keating also said it would be better if the additional contribution be invested in healthcare. He said this would be a wise move for investors because Aussies are living longer.