Don't tinker with super: AMP

AMP provides an update on its performance and also some terse comments about changes to superannuation.

Thursday, May 10th 2012, 10:48PM

by Jenny Ruth

AMP says “very subdued cashflows” experienced in calendar 2011 have continued into the first quarter of this year. Indeed, AMP Financial Services (AFS) experienced a A$292 million net cash outflow in the three months ended March. That was down from the A$331 million net outflow in the December quarter and up from the A$133 million outflow in the March quarter last year.

The company says this reflects “continued uncertainty and subdued investor sentiment.”

However, its New Zealand business provided a bright spot with a net cash inflow of A$47 million in the quarter, up from A$26 million in the same quarter a year earlier.

AMP's risk insurance annual premium income rose to $1.91 billion at March 31 compared to A$1.89 billion at December 31 and A$1.76 billion at March 31 last year. New Zealand premium income rose to A$260 million in the latest three months from A$249 million in the December quarter.

Super tinkering
AMP is railing against government tinkering with superannuation.

Commenting on the Australian government's budget changes to that country's compulsory superannuation system, but in words which can equally be applied to New Zealand's KiwiSaver scheme, AMP chairman Peter Mason said the government should take a long-term view.

“We need to be alert to the consequences of tinkering with it and potentially muting its effectiveness,” Mason said.

While AMP supports lifting superannuation contributions from 9 percent of income to 12 percent, “when there is continuous amendment to the framework for Australia's long-term savings, people feel they can't rely on it to make long-term plans,” he told AMP's annual shareholders' meeting.

“Constant changes to Australia's superannuation system, as we saw again in Tuesday's budget, unsettles people and makes them anxious about the future.”

The greatest contribution government could make right now is to provide certainty and security so people can save with confidence in the future, Mason said.

Superannuation is a long-term response to a long-term demographic and economic challenge and shouldn't be continually modified to meet short-term budgetary objectives.

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