The increase in the Australian superannuation guarantee (SG) from 9 to 12 per cent of salary is an example of how the retirement savings burden, a global phenomenon, can be shifted from the public to private sectors, according to senior partner at Mercer, David Knox.

The increase in the SG, which has been approved in the House of Representatives and will be debated in the Senate this week, will be gradual over the next eight years.

While the percentage of salary deducted will be 12 per cent, the 15 per contributions tax in Australia means the amount in the “super pot” will be more like 10 per cent, Knox says.

“10 per cent for retirement benefits is the right number around the globe,” he says. “With government budgets under pressure and an ageing population, shifting the balance more towards private provision is significant.”

Knox also says, while it seems like the increase is one third (from 9 to 12 per cent), for most members the actual increase will be more like 40 per cent.

“Expenses won’t increase, and members also pay an insurance premium and that won’t increase. So what’s left for retirement is a greater net benefit.”

One of the highlights of the Australian system is its mandatory nature, with all employees, except the self-employed, covered.

The Australian superannuation system had assets of $1.3 billion at the end of June, and assets are expected to double again in the next seven years.

New research released this month gives impetus to the evidence that newspaper articles can predict aggregate future stock returns.

Conducted by Professor of Finance at the University of St Gallen in Switzerland, Manuel Ammann, it examines articles in the German finance paper, Handeslblatt, from July 1989 until March 2011, and overall found that “newspaper content is a valuable predictor for future DAX returns”.

While, typically, economic and financial data dominates the research of economists and analysts looking at future stock returns, the predictive power of newspaper articles can now join the fray.

While this research should be reason enough for you to want to read top1000funds.com, we’re also embarking on change in order to make your reading life easier.

This newsletter marks a new phase in our development – which includes not only new design but also new frequency in our delivery – as we endeavour to deliver in-depth industry analysis in a timely fashion. We will now send a newsletter to your inbox twice a week.

The research by the St Gallen academics has also given me cause to think about the influence and power of media, and how top1000funds.com can challenge its readership but also work with it to influence policy, investment practice and thinking for the greater good.

There have been other qualitative measures that look at the influence of newspaper articles including the The Economist’s informal R-word index which looks at the number of times the Wall Street Journal and The New York Times use the word “recession” in a quarter.

It claims that previous incarnations of the index identified the start of US recessions in 1990, 2001 and 2007.

There is also the “MarketPsych Fear Index” which is a 10-day exponential moving average of the percentage of “fear” words in the US financial news. The company that produces it also now publishes the “MarketPsych Fear Gauge” which is a real-time display of the fear expressed in financial social media.

Perhaps we can develop our own research measuring the influence of our work on this industry.

Certainly top1000funds.com aims to challenge “best practice”, industry norms, conventional thinking and methods of investment. We want to bring you information that is otherwise difficult to access, from your peers, industry observers and academics, looking sideways at the issues and the patterns of change.

As always we welcome your ideas, feedback and referrals. Let’s talk.

 

 

 

 

 

 

 

Mario Batali Is Sorry bit.ly/tNYG1k

Yahoo is searching for a future. It offers a spectacle that involves huge war chests and equally inflated egos econ.st/v49Op6

Speech by Philip Lowe, Assistant Governor, to Australian Farm Institute Agriculture Roundtable Conference, Melbourne –goo.gl/Rjs1U

An unemployment cartoon of the day (with giraffes): nyr.kr/sdG2MV

CalPERS plans to move $1 billion of its externally-managed international fixed income portfolio in-house in the next 12 months, but it will require board approval to do so. (more…)

Texas Teachers Retirement System has extended a unique public markets strategic partnership structure to two of its private market managers in a move it claims will give the fund a long-term strategic advantage over other investors. (more…)

In the interests of educating myself I recently read Chapter 12 “The State of Long-Term Expectations” in John Maynard Keynes’ seminal economics tome General Theory. I particularly like his statement: “it needs more intelligence to defeat the forces of time and our ignorance of the future than to beat the gun”, but then I’ve always fancied the intelligentsia. (more…)