So those in employment are to have a compulsory increase in superannuation contributions of 3%.
What happens to this extra 3% of the national wage bill each
week.
The Government pinches 15% of 3% in contributions tax.
The earnings are taxed at 15%.
There are fees, and commissions in some funds.
Will the remainder be invested in new profitable ventures?
An economist in charge of substantial funds (over $60billion at one stage) once referred to it as a giant game of “pass the parcel”.
In all probability what will happen is that the funds will spend more buying “good” investments from each other at increasingly inflated prices. There are some ridiculously high price/earnings ratios out there.
Without inflation Super fund returns will be dismal on paper, and probably in real terms as well.
The music stops when older people retire and want cash to live on, not promised returns. To whom will shares be sold to generate cash, and at what price.