Perhaps Spartacus is showing his age, but …
This was a song from a film called Mary Poppins which was about a nanny (Poppins) who:
visits a dysfunctional family in London and employs her unique brand of lifestyle to improve the family’s dynamic.
A nanny, a dysfunctional family and improving the family dynamic. That’s not a movie. That’s Australia’s superannuation system. Even though the sound of it is something quite atrocious.
One must admire the chutzpah of the of actors in this in “industry” and their ability to take the savings of the young, the low income and vulnerable and to tell them it is good for them. But consider one little corner of this enterprise, an ASX Listed company called Link Administration Holdings Limited (LNK.ASX).
One of the divisions of Link is fund administration which:
combines its proprietary technology, process and people to deliver a comprehensive financial data solution to its superannuation clients, servicing an underlying stakeholder base of approximately 10 million superannuation account holders. We support clients across all superannuation fund sectors including government, industry, retail and corporate.
Now have a look at the recent share price performance of Link:
You may ask, what happened around mid May to cause Link’s share price to plunge around $1.50, wiping around $800 million off the capitalisation of Link. Well this is what Link said in its market announcement of 10 May 2018:
In the Federal Budget announced on Tuesday 8 May 2018, there were proposed changes relating to the treatment of inactive superannuation accounts from 1 July 2019. The current proposal suggests that for member balances less than $6,000 and where there has been no contribution for 13 months, the account balance will be transferred to the Australian Taxation Office (ATO) and the account closed.
In its current form, the Government’s proposal may have a material impact on the number of members administered by Link Administration Holdings Limited’s (ASX: LNK) (Link Group) Fund Administration Division from FY2020.
In Link’s follow up announcement of 15 May 2018, Link said:
Following the Federal Budget announcements, Link Group has undertaken an internal verification of accounts as at 30 April 2018 with a member balance of less than $6,000 and where there has been no contribution for 13 months or longer. If the Sweep Date under the proposed legislation was 30 April 2018, the estimated unmitigated full year revenue impact to Link Group would be approximately $55 million.
So. To protect small balance superannuants, the impact the company that essentially keeps and manages account administration for some, possibly most, of the accounts is $55 million per annum and $800 million of market cap. But what might be the impact on the insurance providers, the fund managers, the “financial planners”? But what about the Industry and Retail Fund operators who actually clip the tickets that fund all of these services.
That such an enterprise should be allow is pretty offensive. That it is government mandated, well, that another matter.
Good thing we have Industry Super Australia to protect us. After all, its chief executive David Whiteley, reckons that he and the superannuation industrial complex knows better:
This means that teenagers are being asked to make decisions about their retirement. You couldn’t find a cohort of our community less informed, less engaged and less interested in retirement than teenagers. It’s quite baffling.
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