K63 Insurance and Superannuation Funds

Super funds slow to shake off ‘home bias’

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 35 : 28-Jun-17

A report by Vanguard shows that Australian superannuation funds continue to favour local shares over international equities. This is particularly so in the case of self-managed super funds. Australia’s dividend imputation tax system is a major contributor to this "home bias". However, Vanguard notes that the domestic sharemarket is much more heavily weighted toward banks and mining stocks, and investors can reduce portfolio volatility by increasing their exposure to international equities.

CORPORATES
VANGUARD INVESTMENTS AUSTRALIA LIMITED, PROVIDENCE FUNDS MANAGEMENT, STATE STREET GLOBAL ADVISORS AUSTRALIA LIMITED, BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED, AMP LIMITED – ASX AMP, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, IFM INVESTORS PTY LTD

Advice not so super for retirees

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Original article by Michael Roddan
The Australian – Page: 21 : 6-Jun-17

A new online comparison tool is intended to make it easier for superannuation fund members to assess performance data from the Australian Prudential Regulation Authority. The tool will be launched by professional services firm KPMG on 6 June 2017. Meanwhile, a new report from KPMG has found that industry funds’ share of the super industry has risen to about 33 per cent since 2004, while the market share of retail funds has fallen from 43 per cent to 29 per cent.

CORPORATES
KPMG AUSTRALIA PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN TAXATION OFFICE, AUSTRALIA. PRODUCTIVITY COMMISSION, CHANT WEST FINANCIAL SERVICES PTY LTD, SUPERRATINGS PTY LTD, AUSTRALIANSUPER PTY LTD, AUSTRALIAN LABOR PARTY

LVR loans aren’t bad: Genworth

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Original article by Alice Uribe
The Australian Financial Review – Page: 18 : 4-May-17

Genworth Mortgage Insurance Australia has posted a statutory net profit of $A52.2m for the March 2017 quarter, down from $A67.3m for the same period in 2016. Meanwhile, CEO Georgette Nicholas notes that mortgages with high loan-to-value ratios can be appropriate, provided there is sufficient oversight. Nicholas adds that loans with high LVRs are often essential for first-home buyers, and she warns that a crackdown on such loans may prompt people to seek higher-risk loans.

CORPORATES
GENWORTH MORTGAGE INSURANCE AUSTRALIA LIMITED – ASX GMA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Senate inquiry blasts ATO on unpaid super

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Original article by Michael Roddan
The Australian – Page: 23 : 3-May-17

It is estimated that about three million Australian workers do not receive their compulsory superannuation contributions, which equates to around $A6bn per year. A Senate economics committee inquiry has recommended that the Australian Taxation Office should adopt a more proactive approach to non-compliance with the super guarantee regime. The ATO’s focus at present is on a self-reporting system for employers who fail to pay some or all of the guarantee.

CORPORATES
AUSTRALIA. SENATE STANDING COMMITTEE ON ECONOMICS, AUSTRALIAN TAXATION OFFICE, AUSTRALIAN LABOR PARTY, LIBERAL PARTY OF AUSTRALIA, AUSTRALIA. OFFICE OF THE AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMAN, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. DEPT OF FINANCE, INDUSTRY SUPER AUSTRALIA PTY LTD

Multiple SMSF strategy may prove illegal

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Original article by Sally Patten
The Australian Financial Review – Page: 5 : 24-Apr-17

Changes to superannuation tax rules from 1 July 2017 may prompt some investors who already have one self-managed super fund (SMSF) to set up a second one. However, the Australian Taxation Office has indicated that it will keeping a close eye what it perceives as any attempt to reduce tax by setting up a second SMSF. Fines, penalties and even disqualification are possible remedies available to the ATO.

CORPORATES
AUSTRALIAN TAXATION OFFICE, SMSF ASSOCIATION, HLB MANN JUDD

AustralianSuper, Hostplus blast rivals’ premium hikes

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Original article by Michael Roddan
The Australian – Page: 18 : 23-Dec-16

Premiums for insurance policies arranged through superanuation funds are rising too fast. Rice Warner reports that the cost of death and total and permanent disability cover has risen 215 per cent on average since the beginning of 2013. IOOF wealth management manager Renato Mota says the rises were necessary because the rates were "unsustainably low".

CORPORATES
RICE WARNER ACTUARIES PTY LTD, IOOF HOLDINGS LIMITED – ASX IFL, AUSTRALIANSUPER PTY LTD, HOST-PLUS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, COMMINSURE, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Super trustees ‘fail to act’ on liquidity risks

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Original article by Alice Uribe
The Australian Financial Review – Page: 17 : 21-Dec-16

The Australian Prudential Regulation Authority has expressed concern that many trustees of superannuation funds are not using the results of liquidity stress testing when making investment decisions. APRA has noted that while super funds have made progress with regard to liquidity stress testing, further improvement is needed. Rice Warner adds that Australia’s ageing population presents a major liquidity risk for super fund trustees.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RICE WARNER ACTUARIES PTY LTD

Under-30s turning their backs on private health

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Original article by Sarah-Jane Tasker
The Australian – Page: 4 : 13-Dec-16

Data from comparison website iSelect shows that a growing number of Australians under the age of 31 are questioning the need for private health insurance. CEO Scott Wilson notes that the lifetime health cover loading has ceased to be an incentive for younger people to take out private cover, as many are satisfied to use the public hospital system. Wilson expects private health insurance premiums to rise by 4.5 per cent to five per cent in 2017.

CORPORATES
ISELECT LIMITED – ASX ISU

Volatility hits fund earnings

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Original article by Michael Roddan
The Australian – Page: 23 : 17-Nov-16

Data from Mercer shows that Australia’s median shares fund manager achieved a return of negative 3.1 per cent between August and October 2016. SuperRatings’ figures show that the median superannuation fund boasted a return of minus 0.7 per cent for the period, including a one per cent loss in October. Factors such as the outlook of inflation and uncertainty over the timing of a rate rise in the US weighed on financial markets in October.

CORPORATES
MERCER INVESTMENTS PTY LTD, SUPERRATINGS PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD

Funds shun ASX in favour of cash, property

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 27 : 19-Oct-16

Tim Baker of Deutsche Bank forecasts that Australian superannuation funds will receive some $A65bn worth of mandatory contributions in 2016-17. Discretionary contributions are expected to be around $A15bn, compared with the annual average of $A20bn. Meanwhile, Baker notes that super funds are scaling back their equity holdings and increasing their exposure to investment options such as cash, infrastructure assets and commercial property.

CORPORATES
DEUTSCHE BANK AG, AUSTRALIAN UNITY INVESTMENTS, UNISUPER LIMITED, AUSGRID PTY LTD, PORT OF MELBOURNE