Unfunded superannuation liabilities – what are they?
Did you know that not everyone’s superannuation money is sitting in their account ready to be taken at retirement? Some people’s super money is merely ‘synthetic’ meaning an amount of money exists that the policyholder is entitled to, yet its in the form of an IOU! Now before you tune out thinking that we are referring to dodgy or unscrupulous employers here, think again. We are talking about the government that owe this money to people with super accounts in government funds. Now of course if I needed to have someone (or something) owing me money, I trust the Australian government because they are big, stable and generally don’t mess things up. But of course many people in Greece and Argentina thought the same thing before their respective governments put their hands up recently declaring “virtual bankruptcy”.
So is there any need for alarm? No….or certainly not yet. However, before unfunded super liabilities get too out of control in Australia, the Minister for Financial Services, Bill Shorten has signalled in Money Management recently that governments – both State and Federal – need to sort this situation out before it gets out of control, and that is a good thing. So don’t stress if you have your money in a government unfunded superannuation fund at present, but keep an eye out over time to see that the Australian government is putting away money to account for it, and that the formula the government applies in determining your super lump sum remains consistent and fair.
After all you don’t want a surprise in retirement, aside from a hole in one …if you like golf 🙂