Margaret Thatcher sought to convert Britain from a nation of shopkeepers to one of shareholders. Compulsory superannuation and low rates – until recently – on traditional bank deposits have converted most Australians into accidental investors.

Beginning in the 1980s, retirement arrangements changed from defined benefits (an inflation-indexed pension based on your final salary, paid by employers or government in return for regular contributions) to defined contribution schemes (at retirement you receive your and the employer’s payments, plus investment returns).

Today, Australian retirement schemes are about 86% defined contribution, compared with 5% (countries with indexed pensions, like Japan or the Netherlands) to 64% (the US) globally.

The move away from defined benefits reflected its expense and often unquantifiable risk, such as longevity, for the provider.

For example, Australia’s Future Fund was established to meet unfunded liabilities of public sector indexed pensions. Marketed as increasing choice, allowing portability and supported by generous changeover arrangements and tax incentives, the responsibility and investment risk was covertly shifted on to employees.

With roughly 48% of superannuation funds invested in shares (among the highest globally), it assumes a significant level of individual financial literacy.

Few investment funds will record positive returns this year due to falls in share markets and other financial assets. Most superannuation funds will lose around 3-10% depending on their investments, albeit after recent strong rises.

Where funds show modest positive returns, gains are often from unlisted private assets (which now make up to 10-15% of investments). As prices are not easily observable, the valuations used are opaque, subjective and infrequent.

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