from a shortlist of four to 10 high-quality
products selected by a government body
usingafiltertonarrowdownthebest-
performing products. Employees would
receive information to help them make an
informed choice.- Employers choose the fund from a wider
shortlist.However,minimumstandardsto
protect employees would still apply. - Fundswouldcompeteforashareofthe
defaultpoolonarangeofcriteriaincluding
performance, investment strategy, member
satisfaction, quality of member services,
fee levels and transparency and innovation.
Buthowdoyouinvestinphysicalgold?
One of the best ways is through a physically
backed exchange traded fund (ETF). They
invest in gold bullion, which is stored in
vaults, and they track the gold price.
There are four currently listed on the
ASX:ANZETFSPhysicalGoldETF
(ZGOL), BetaShares Gold Bullion ETF –
Currency Hedged (QAU), ETFS Physical
Gold (GOLD) and Perth Mint Gold
(PMGOLD). PMGOLD is the cheapest with
a management fee of 0.15%, ZGOL and
GOLD both cost 0.40% while BetaShares
charges 0.49%.
BetaSharesistheonlyhedgedoptionso
with the others you need to remember that
theexchangeratewillplayaroleinthe
value of your investment.
Another option is ABC Bullion’s Gold
Saver.Youcansetupadirectdebittomake
regularinvestments.ABCBullionconverts
thismoneyintophysicalgoldthedayit
receives the money. Your savings are then
linked to the price of gold. Regular savings
canbemadeweekly,fortnightlyormonthly
andyoucandepositfrom$50upto$5000
perinstalment.Thetransactioncostis2%
butyou’llpaynostoragefees.Youcanalso
sell back your gold to ABC Bullion at any
timeoryoucanrequestyourinvestmentis
convertedintophysicalbarsforyouto hold
yourself, although fees will apply.Annette Sampson has written extensively
onpersonal finance. She was personal
finance editor withThe Sydney Morning
Herald, a former editor of theHerald’s
Money section and a columnist forThe Age.
She has written several books.they would automatically be required to
contributetotheemployee’sexistingfund
orafundoftheirchoice.
Ithasalsoraisedtheideaofreducingthe
number of default funds to as few as five,
though this would depend on what changes
tothesystemwereintroduced.
While only a draft report so far, the
commissionislookingatfourdifferent
ways of choosing default funds:
- Employees get to choose their own fund
- Funds would compete for default
status by bidding in a fee-based auction.
Competing funds would have to pre-
qualifybymeetingcertainstandards.
Thecommissionsayseachof
these options comes at a cost but
argues we need to address the
coreproblemofacompulsory
superannuation system that is
too complex for many people
to make appropriate choices
by themselves.
- Funds would compete for default
WHAT ABOUT EXISTING
MEMBERS?
Thereportsaysfundsshouldbe
required to extend any benefits
provided to new default members to
existing members as well. If you have
alreadyexercisedtherighttochoose
your own fund, you would be able to
remainwithit,thoughitmightbeworth
asking whether it was still the best option
foryourneeds.DID YOU KNOW?
Almost90%ofthe$474billionheldin
MySuperaccountsiswithnot-for-prof-
it funds. Just $55 billion is invested in
MySuper accounts operated by the retail
or for-profit funds.BEST-CASE
SCENARIO
Because super is compulsory,
governments should try to ensure members
get the best deal possible. Any measures that end
up making things simpler for members, and increasing
competition between funds, is likely to be positive.
WORST-CASE SCENARIO
The ideological battle between industry or not-for-profit funds
and the retail funds managed by the big financial institutions is
centraltoanyreforms.Oneofthekeydriversofthereviewhas
been retail funds’ claim that the current system where default
fundsareoftenpartofindustrialagreementsisanti-competitive.
The Productivity Commission has so far conducted the review
without regard to politics or vested interests and come up with
some ideas it believes will make for easier choices and greater
competition. But the lobbying to protect existing patches
andtakebusinessfromtheothersidewillbeintense.
THE WILD CARD
The government has its own ideological
opposition to industry funds, which
itoftenreferstoasbeing
“union controlled”.Finally you can buy physical gold bullion
or coins from providers such as Perth Mint,
ABC Bullion and Gold Bullion Australia.
Thedrawbackofthisoptionisthatitdoes
not pay an income while it’s in storage so
you’re really relying on prices to rise and
you’ll need to get the timing right to profit.
You will pay a premium on the gold
pricesoit’sagoodideatoshoparoundand
comparepremiumsandcommissions.
Youwillwanttomakesureyouhavea
suitableplace–suchasasafedepositbox
–tokeepit.Reputablegoldmerchantscan
also store it for you but you’ll have to pay.
Forexample,Perth Mint charges 1%pa for
gold storage.