Supercalifragilisticexpialidocious

Perhaps Spartacus is showing his age, but …

It’s supercalifragilisticexpialidocious
Even though the sound of it is something quite atrocious
If you say it loud enough, you’ll always sound precocious
Supercalifragilisticexpialidocious

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.

Follow I Am Spartacus on Twitter at @Ey_am_Spartacus

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17 Responses to Supercalifragilisticexpialidocious

  1. Eyrie

    “Servicing” is right. Like a bull services a cow.

  2. Senile Old Guy

    …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.

    So the government will simply steal the money. This LNP government is the biggest taxing and spending government ever, in Australia. Demonstrated clearly by DL’s post yesterday.

  3. H B Bear

    Expect a drop in Mosman house prices if the government mandated Australian ticket clipping industry is under threat.

  4. Up The Workers!

    “I’m from the Misgovernment, and I’m here to help myself (to your cash).”

  5. Dr Fred Lenin

    Remember the old song “somthins gonna give” , these career polliegangsters are so far up themselves it’s unbelieveable ! Take take take ,only give if it helps your career ,rip off the voters till they squeal , tax their smokes and beer to Hell ,we don’t smke or drink beer that’s for peasants , one day there will be a reckoning and it won’t be pretty ,to paraphrase lance corporal Jones “they won’t like it up em Sir they won’t like it” , hope I’m about to see it, be delicious watching them squirm if they are alive enough to do it . Eradication of political gangs and career gangsters,the smell of fresh air will be delicious, first time we have smelled it for years .

  6. Dr Fred Lenin

    Remember the old song “somthins gonna give” , these career polliegangsters are so far up themselves it’s unbelieveable ! Take take take ,only give if it helps your career ,rip off the voters till they squeal , tax their smokes and beer to Hell ,we don’t smke or drink beer that’s for peasants , one day there will be a reckoning and it won’t be pretty ,to paraphrase lance corporal Jones “they won’t like it up em Sir they won’t like it” , hope I’m about to see it, be delicious watching them squirm if they are alive enough to do it . Eradication of political gangs and career gangsters,the smell of fresh air will be delicious, first time we have smelled it for years .

  7. mareeS

    Fortunately we have a long-running family SMSF, to which we have added our two offspring as they attained adulthood and working status. One has her compulsory super paid in directly by her employer, the other is a contractor who rolls his over from CBUS or others at the end of each financial year.

    We pay a wholesale management fee, not retail, and our fund returned nearly 12% last F/Y. Any abolishment by a Shorten govt of dividend imputation refunds is well cushioned by having the kids as members, plus they have been able to tailor their insurance requirements through the trust.

    Now that the government has expanded SMSF membership from 4 to 6, other families with more than 4 family members may find this appropriate.

    Plus, we are in retirement phase and are required to take out a minimum amount each year which is surplus to our needs, and so helps with their mortgages and a good family holiday each year.

    Lots to be said for the way Peter Costello set things up for us, not so much the way present-Day politicians are trying to raid it all.

  8. Kevan Daly

    Spartacus

    I don’t know how you expect super fund accounts to be administered. Pen and paper, file index cards? The deployment of computers and appropriate platforms cost money to develop and operate. cavilling about m$55 is just plain ignorant, along the lines of the Royal Commission’s “fee for no-service mantra”.

    Also that m$800 market cap covers two other areas of activities for Link – a share registry business and a financial services business in the UK.

    Do your homework before mouthing off.

  9. Do your homework before mouthing off.

    Dearest Kevan. One might say the same to you. Please read the post carefully.

    1 – the $800m market cap decline is not the market cap of Link. The market cap of Link was $4 billion plus (as in 1000x $1 million) before their budget impact announcement. The remaining $3.2 relates to their registry, UK and remainder of the superannuation business and other businesses.
    2 – $55m was not the cost to maintain the all accounts or the revenue of their superannuation administration business. It was the amount estimated to be lost from the transfer of inactive small balance accounts at the ATO. Presumably Link make much more than that for the part of their business that deals with active larger balance accounts.
    3 – Spartacus was using Link to demonstrate that they were just 1 cog in the system of extracting money from the young, poor and vulnerable. Because if you think it is appropriate for Link to collect $55m per annum from inactive small balance account (ie accounts which have not been touched for over 13 months – no money in or out or not contact) well then perhaps you should say that and disclose whether you have any conflicts of interest in this matter.

    Have a nice day Kevo.

  10. EvilElvis

    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.

    FMD. If that’s baffling then you shouldn’t have your dirty mitts anywhere near the till. Can you blame teenagers? It’s a long way away. On the otherhand I’m early forties and have the same attitude, but only because death will greet me before this fantasy of retirement.

  11. Bruce of Newcastle

    Never stand between the ATO and a bucket of money.

  12. DaveR

    So what Link stands to lose each year, starting immediately, the ATO picks up. And then the ATO closes the superannuation account.

    If ever there was evidence of ATO overreach, unburdened by parliamentary oversight, this is it. A complete, naked grab for funds, predominantly coming from lower paid workers, straight into budget repair.

    When are Australians going to wake up are realise this is not equitable, and totally unacceptable? In Europe and USA there would be riots over this sort of state activity.

  13. Norman Church

    When I saw the tag line, I thought this piece was about Mahatma Ghandi.

    In his latter years, his work at the spinning wheel caused extremely tough patches of skin on his hands. As he fasted a great deal, he becane quite skinny and frail. And he also suffered from bad breath which is not a great thing for a religious guru.

    You see, he was a super calloused fragile mystic hexed by halitosis.

  14. Roger W

    Norman Church, you are a gem!

  15. Peted

    It’s like some of the commentators here missed the bit where the ATO is required to roll over the funds into the active Super Fund.

    At the moment, the paper work and exit fees can be quite difficult to manage.

    When my wife rolled over her Super years ago, the fund “lost” the paperwork, so we drove to the fund offices to physically hand it over.

  16. J.H.

    LOL…. Norman Church. You’ve derailed my pessimistic thought processes…. Thanks for that laugh.

    Super calloused fragile mystic……. Well I never.

  17. struth

    You’re spelling is wrong.

    Just sayin’

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