As most members would be aware, a new strain of Coronavirus (COVID-19), has spread around the world, including to Australia, since being discovered in China in December 2019.
COVID-19 is already impacting the world in several ways, including financially and thus investment markets. On top of that, governments are reacting differently to COVID-19 and that is also affecting investment markets.
The key message, however, is that market downturns are expected and are transitory. The long-term nature of superannuation means that most members should not need to do anything in response to the market changes we are currently seeing.
Our investment advisors have prepared a detailed video commentary on the impact on investment markets of COVID-19 which you can view at the following link https://www.youtube.com/watch?v=jh2pBTp8yME
AvSuper’s pandemic preparations
The Trustee has a detailed pandemic response in place, as part of our Business Continuity Plan (BCP) arrangements to reduce the risk of the Fund not being able to operate at full capacity, including in a worst case scenario, and to ensure we can maintain ongoing member services.
Some of the contingency measures we have in place that we can draw on include:
- Requiring staff to self-isolate if they travel to affected areas or are exposed to infected persons
- Remote working capability which will allow staff to work from home or from other locations if required
- Enhanced office and meeting room cleaning processes
- Promoting good hygiene and other preventative health measures
- Systems in place for communicating with staff about any changes to work practices
- Introducing segregated teams and shifts
- Reviewing key supplier’s continuity plans and progress regularly
- Use of videoconferencing and webinar tools to replace face to face meetings
- Reduction of non-essential travel is already in place and this can be extended as required
- Redeploying staff from non-critical tasks if significant numbers of staff were unable to work
We expect to be able to maintain services for members should the pandemic escalate, although we recognise that it is possible that transaction processing may slow down if a significant proportion of our population is infected. We will keep members informed along the way, should this transpire.
What do you need to do?
Overall, there’s not a lot you can do except remember super is a long-term investment. Stay informed – talk to us if you need some help – and take a look at your investment choices.
Historically, significant downturns in investment markets are followed by stronger growth for those who wait it out. Moving out of shares when markets drop effectively locks in the losses so waiting for the markets to swing back up is often the best strategy, despite generating fear in us all.
If you have 10 or more years to retirement…
The reality is that this is just one major market fluctuation out of a number you will likely experience before retirement – investment markets do go up and down. It’s important to understand what is happening and assess your investments against your financial goals, but it also needs to be kept in perspective so stay calm.
Your savings may take a hit in the current market, but there is time for them to recover before you will withdraw your money. And we will be keeping an eye on markets to possibly grab some assets and opportunities while prices are low.
If you have reached or nearly reached retirement…
It may look rather scary to see your savings decrease by factors outside your control, especially as no one knows how big the impact will be or for how long. But it is worth remembering that unless you are invested entirely in cash assets, your income stream investments will catch any improvements in the markets and that even in retirement, you may have anything from 15-20 years for your super savings to recover from this downturn.
At the same time, you may be able to adjust your investment choices a little to reduce the risk and make you feel more secure. Look carefully at your options and consider them in line with your risk appetite, current and projected needs, and time frames before making any major changes – and don’t forget that our Member Advice Consultants can help you work through your choices.
More questions and concerns?
We know there is a lot of uncertainty at the moment, and watching people panic doesn’t help us feel more secure. So if you are concerned about your super and wondering what you should be doing, we encourage you to call us or make an appointment with one of our Member Advice Consultants to work through your situation.
Advice appointments with AvSuper can be done by phone (as well as face to face) so we will continue this service even if quarantine rules tighten considerably in Australia.