Investment update 21 May 2018

Last week in the markets

Over the past week Australian shares rose 0.1% with small company shares unchanged. Shares in developed countries dropped 0.5% with the US market also down 0.5%. Shares in emerging markets declined by 2.3%. The Australian dollar decreased by 0.4% to 75.11 US cents. The Australian 10 year bond yield increased to 2.90%, with US 10 year bond yield also higher at 3.06%. The oil price rose by 0.8% to 71.28 US dollars per barrel.

Comprehensive Income Product for Retirement

In late 2016, Treasury proposed a new post-retirement product, referred to as a Comprehensive Income Product for Retirement (known as a ’CIPR’). In their discussion paper, Treasury outlined the concept of CIPR’s, which are designed to provide an income for life regardless of people’s age. So, if you’re in your late 90’s (like some of our members), you’d continue to receive regular ongoing income.

At Mine Super, we felt the concept of a CIPR was a good one, but we had concerns surrounding the detail of how the product would work. These concerns were shared by others in the industry.

Subsequently, we made a submission to Treasury, highlighting our concerns and calculating estimates of the negative impact if some of the details weren’t changed. We had a good engagement with Treasury and also shared our models with them.

Following the Federal Budget, an updated position paper on CIPR’s has been released. Nearly all of our concerns have been addressed. This is a great example of how policymakers consult with industry to incorporate information into their own work, and update their policy design accordingly.

There will be exciting times ahead in the superannuation industry, which should enhance retirement outcomes. CIPR’s should improve the broader quality of retirement products, as well as services like financial advice. I expect this will ultimately result in better retirement outcomes for our members.


Signing off

David Bell | Chief Investment Officer

Past performance isn't necessarily an indicator of future performance.

Data sourced from Bloomberg.