tag:blogger.com,1999:blog-24338064.post678161151970615267..comments2024-02-11T19:28:27.997+11:00Comments on Personal Reflections: Saturday Morning Musings - economic overviewJim Belshawhttp://www.blogger.com/profile/10075614280789984767noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-24338064.post-54017936570284164122013-07-28T07:35:13.173+10:002013-07-28T07:35:13.173+10:00Hi Jim
Certainly does not detract from your point...Hi Jim<br /><br />Certainly does not detract from your point, but I'm a great fan of the decision to establish the FF (one of the best things that government did IMO) so I always perk up my attention when it's mentioned.<br /><br />And your comment about targets, as you have stated before several times, I very much agree with.<br /><br />But back on the FF for a moment, while I accept the 'de-linking' the Guardians note, I feel it would be useful for the taxpayer if one of their highlighted bullet points in each Annual Report was a reference to the projected liability out, say 10 and 20 years.<br /><br />I'd trust their actuarial projections much more than the intermittent shock-horror reportage this sometimes attracts.<br /><br />kvdAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-24338064.post-49081734790254974812013-07-28T06:32:34.142+10:002013-07-28T06:32:34.142+10:00Points noted, kvd and especially the partial quali...Points noted, kvd and especially the partial qualification. But do they detract from my simple point? <br /><br />Putting that aside, I found your comments on the fund's performance interesting. There is a danger here, one that I have referred to in the context of business planning. In a world of targets in which everybody is trying to achieve above average returns, it logically follows that the aggregate targets cannot be achieved and that the attempts to do so create their own dangers. <br /><br />We have talked about this before, but it has significant implications for bodies like the Future Fund and indeed the entire Australian super structure. Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.comtag:blogger.com,1999:blog-24338064.post-88768015234587318402013-07-27T19:47:30.834+10:002013-07-27T19:47:30.834+10:00Ah, the Future Fund:
the asset's of Australia...Ah, the Future Fund:<br /><br /><i>the asset's of Australia's Future Fund passed $A100 billion as the depreciating value of the Australian dollar increased the value of the Fund's international investments. The fund was founded in 2006 to meet future pension liabilities of Commonwealth public servants.</i><br /><br />Corrections:<br /><br />The Future Fund was established to <i>partially fund the previously ignored problem of retirement benefits</i> due to public servants, including military personnel.<br /><br />The Future Fund is to be the repository of Federal Government budget surpluses - pardon? - and was given a 'kick-start' by the arbitrary transfer of a significant part of the remaining Federal Government equity in the then recent public floatation of Telstra.<br /><br />The Board of the Future Fund is not a 'board' as normally associated with any corporation; rather, it terms itself a 'Board of Guardians'.<br /><br />The Board of Guardians in its 2012 annual report made quite plain its interpretation of its mandate:<br /><br /><i>The Board also determines that as <b>it is not charged with ensuring that the Fund fully offset the pension liabilities of the Commonwealth</b>, it should not frame its investment strategy around the risk of these obligations increasing relative to the asset base.</i><br /><br />- which is fair enough, because that's a big ask. But accepting that, do they set themselves any sort of goal at all - or just sit round discussing the cricket, while investing all funds in, say, an ASX index-tracker?<br /><br /><i>The Board has interpreted the requirement to achieve a return of at least CPI +4.5% per annum over the long term as meaning over rolling 10 year periods</i><br /><br />- fair enough, again. Hard times, easy times; a ten year horizon is not necessarily a bad thing. But, just asking - how'd you go this year?<br /><br /><i>Following strong positive returns over the last two years, market uncertainty resurfaced during 2011/12 with the Fund generating a modest return of 2.1% for the year. </i><br /><br />A "modest return"? Note to self: henceforth 'modest' = 'negative'.<br /><br />kvdAnonymousnoreply@blogger.com