POWERED BY MOMENTUM MEDIA
Restore LRBA ban says ASFA
The Federal Government should use the May Budget to restore the general prohibition on direct borrowing by superannuation funds, according to the Association of Superannuation Funds of Australia (ASFA).
In doing so, ASFA has pointed to an almost exponential increase in the amount of funds borrowed leveraging Limited Recourse Borrowing Arrangements (LBRAs).
The ASFA has used its pre-Budget submission to point out that it has had a long-standing policy of opposing borrowing by superannuation funds and that the ban was something which was supported by the Financial System Inquiry (FSI).
“… the use of LRBAs by superannuation funds is not appropriate,” the submission said.
“The amount of funds borrowed using LRBAs has increased substantially, from $497 million in June 2009 to $25.4 billion in June 2016, an increase of around 5,000 per cent,” the ASFA submission said.
“Borrowing, even with LRBAs, magnifies the gains and losses from fluctuations in the prices of assets held in funds, and increases the probability of large losses within a fund. This puts individuals’ superannuation at risk,” it said.
Recommended for you
Governor Michele Bullock took a more hawkish stance on Tuesday, raising concerns over Donald Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
Broadly i agree with the philosophy of not attracting greater risk to retirement monies, but with the continual contraction of concessional and non concessional caps, this might be the last resort for those attempting to get greater balances into superannuation.
perhaps the level of borrowing (LVR) might be easier to restrict moving forward rather than to knock LRBA out fully