If there really is entrenched anti-women discrimination in business, then the recent work published by the Australian Bureau of Statistics is likely to set back, not advance, the gender equality movement. Continue reading
Year: 2012
UBS, $2.3b and the blame game
The trial is over and Kweku Adoboli has been sent to gaol. Seven years, is the sentence. The prosecution had compared Adoboli’s crimes with those of a paedophile, rapist and murderer. Crikey, it’s not long ago that he would have been sentenced to 7 years in Tasmania for those crimes, rather than a low security prison for white collar criminals where presumably he will serve out his sentence in England.
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Daylight saving – curtains, hard-boiled eggs and erections
In South eastern Australia, daylight saving time (DST) has just commenced again. The clocks were advanced by one hour last Sunday, marking the symbolic beginning of summer, even if the weather is not yet anywhere near summery. I like daylight saving, but not everyone does. It is normal to have on-going discussions to its merits at this time of year and there is a perennial debate in the Australian states that do not observe DST.
Typically, the Council of Curtain Manufactures, drawing support for closure on the topic from local branches, is confident that the extra sunlight results in more rapid fabric fading hence generating an increase in demand for new supply, and so argues in favour of introduction. But dairy farmers consistently argue that the six-monthly chopping and changing of the clocks causes confusion and uncertainty among the herd, as the cows struggle to come to terms with the time that they are due in the milking yard. Those melancholic bovine eyes are often hiding the early onset of anxiety disorders, never exactly sure if they are time-adjusted correctly. The West Australian State Roosters Association mounted a strident objection to the proposal last time it was put to the WA voters, arguing that the change not only upset their crowing rhythm but also the egg-laying rhythm of their hens, forcing the hens to wait and lay eggs one hour after they were actually ready to. Apart from the uncomfortable physical sensations that this caused, the roosters also suggested that it made the egg shells harder, more calcified and made it more difficult for consumers to judge the correct length of time that an egg needed to be boiled. The clinching argument in Queensland, though, came from a group of concerned wives who argued that it was common for their husbands to wake up with a morning erection. They argued that if the hour was advanced, surely there would be severe embarrassment for all those men getting on the bus to go to work at the time they were still experiencing this early morning phenomenon instead of quietly dealing with it over breakfast and the newspaper.
And so it goes.
The SG increase: implications for employers
Starting on 1 July 2013, the Superannuation Guarantee (SG) minimum rate begins its phased increase from 9% of Ordinary Time Earnings (OTE) to 12%. The phase in period is 6 years. This increase has implications for employers.
OECD DC Design roadmap
The OECD has recently published a roadmap for the design of DC retirement savings pension plans. In doing so, the OECD has stated that its aim is to help countries strengthen their retirement income adequacy. Essentially the roadmap boils down to 10 recommendations. The recommendations all make good sense, yet it is instructive to review the Australian experience of the last two decades to see how sensible recommendations are not necessarily easy to implement.
An age-old solution to an old-age problem
Sooner or later, people will wake up to the fact that the actuaries of more than 100 years ago had come up with a robust and efficient system of providing for old age that did not require every individual to accept longevity and market risk on their own with no options to hedge. Having individuals plan for retirement on the basis that they ‘might’ live longer than average is a flawed approach. Risk pooling is the way to manage this effectively and efficiently. And actuaries can price that risk for trading in the market.
The asymmetry of life expectancy
According to Australian statistics, the average male aged 65 can expect to live until age 83. For females, it is age 86. (These statistics are extracted from the Australian Life Tables 2005-07). That might seem like a useful base upon which to plan for retirement. How much savings are needed before someone is able to retire depends on how much they need to meet living expenses and how long they are going to live. Predicting living expenses is a lot easier than predicting your remaining lifespan, but you have to start somewhere.
Twisting the language of tax for political gain
George Orwell wrote of the importance of language as a political tool. Language could be used to manipulate the way people think.
Today’s example of manipulative language comes from the world of superannuation tax. Apparently, using the language of the politically motivated, high income earners in Australia receive greater superannuation tax concessions than do low to middle income earners. Consequently, reform is needed to make the system fairer and levy a higher rate of tax on the superannuation contributions of the high income earners.
Right risking an investment portfolio
Generally, reduced exposure to equities, in favour of bonds, will reduce the expected long-term return of an investment portfolio. However, the variation of short-term returns will also be reduced. This is a means of risk control, but an overall reduction in investment return, will result in higher cash contributions from the employer sponsor of a defined benefit (DB) pension plan. Is the trade-off worthwhile? How is the trade-off quantified?
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The difference between DB and DC superannuation plans
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In the world of private sector pensions, how often have you heard that defined benefit (DB) plans are different from defined contribution (DC) plans? How often is the difference explained by risk acceptance: in a DB scheme the employer bears the risk (of investment losses, mortality improvements etc) and in a DC scheme the employee bears the risk? |