Exclusive: The CEO of BetaShares has sledged the government’s early super scheme, saying super “should not be used as an ATM when times get tough”.
While Alex Vynokur believes the Morrison government has done a “stellar job” managing Australia through the COVID-19 crisis, he’s less fond of its wildly controversial early super release scheme.
“The early release superannuation policy flies in the face of decades of consistent messaging and education and decades of consistent policy on the fact that building retirement nest eggs takes a long time through diligent savings, contributions and patience,” Mr Vynokur told Investor Daily. “Superannuation funds should not be used as an ATM when times get tough.
“It is a short-sighted policy that will result in a short-term sugar hit to those affected at the expense of their super balances in 20 or 30 years’ time.”
While Mr Vynokur doesn’t deny the need for financial relief, particularly for the disproportionately impacted under 30 age group, he believes “a substitute is required”.
“For young Australians and those who have had their earning capacity significantly reduced as a result of this crisis, I would be very supportive of additional government stimulus measures, which would involve support payments directly from the government, as opposed to doing so indirectly via superannuation balances,” Mr Vynokur said.
Australia’s super funds copped a flogging from the Morrison government in the lead-up to the early release super scheme, with senator Jane Hume warning that funds weren’t “sacred cows” and any that had liquidity issues would wind up in the government’s crosshairs. But Mr Vynokur says “no stress test can withstand such a drastic policy change”.
“Super funds need to maintain a level of liquidity. In normal circumstances there will be investors that choose to switch funds or investment options, and there will always need to be liquidity to facilitate that,” Mr Vynokur said. “But super funds are there to provide long-term asset accumulation and retirement needs for Australians… In my view, it should have been coupled with liquidity support from the government to the super fund industry.”
And while some commentators have called for the government to spend its JobKeeper savings, Mr Vynokur wants them put aside for the proverbial rainy day.
“A recovery will not be a straightforward exercise,” Mr Vynokur said. “It will be full of twists and turns and I would be keeping my powder dry and not committing one way or the other just yet,” he said.
“Keep that $60 billion aside and deploy it as and when the nation needs it.”
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