Finance Your Super Aussies pay the price for failed Greek bailout

Aussies pay the price for failed Greek bailout

Photo: Getty
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Fallout from the Greek debt crisis is now rippling through to ordinary Australians, with retired migrants and superannuation members feeling the pinch as the situation in Athens worsens.

Australia has the third-largest Greek population outside the Hellenic Republic, with around 700,000 people assessed by the Greek government to be citizens of the tiny Mediterranean country now girt by debt.

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Theo Markos, an influential member of Melbourne’s Greek community, says the crisis is becoming a strain on thousands of Australian households as they try to help relatives living in Greece.

“There are thousands of Greek Australians sending money to distressed relatives in need, and many Australian expats with savings are remitting money to Australia because they don’t know what’s going to happen with the Greek banks,” Mr Markos said.

“It’s very upsetting – who knows what will happen next.”

Mr Markos said many Greek Australians who had invested in family businesses in Greece were also under pressure as the debt stand-off threatens to deepen the country’s economic depression.

On Wednesday, prime minister Alexis Tsipras wrote to international creditors saying Greece could accept a bailout offer published on June 28 if several conditions were changed.

In exchange, Athens wants a 29 billion euro loan to cover all its debt service payments due in the next two years.

Crisis weighs on super returns

But you don’t have to be Greek to be copping a bruise or two from the bailout chaos in Brussels and Athens.

The Greek crisis is also set to take a big bite out of Australian superannuation members’ returns, with most balanced funds now expected to deliver average gains of around nine per cent for the financial year.

Most super funds had been sitting on double-digit returns for the 11 months to the end of May, before the dramatic turn in Greece’s situation exacted a big toll on investment markets in the final week of June.

While superannuation research houses are still calculating the impact of the sharemarket plunge, most expect the average loss recorded by balanced funds in June was 2.5 per cent.

SuperRatings Graph v01_v

However, the two biggest research houses differ slightly on what the negative June returns will mean for full-year returns.

According to SuperRatings, the average return for balanced funds is likely to be nine per cent.

“Super funds were tracking well for in excess of an 11 per cent return at the end of May, however, the last-minute share market rout substantially reduced the end result,’’ SuperRatings chief executive officer Adam Gee said.

“It’s a case of bad timing for the majority of Aussie super funds, which report their important end of financial year results at June 30, unlike other countries which have different financial year ends.”

However, Chant West researchers are a little more sanguine, with their estimates suggesting average returns for the year are likely to be in the order of 9.5 per cent.

If the research companies are right, the 2014/15 year will be the first time since 2011/12 that average returns on balanced investment options offered by super funds have fallen below 10 per cent.

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Chant West director Warren Chant warned that the gap between top-performing funds and underperformers for the year just ended could be quite large.

“We’re expecting the top funds to report returns as high as 12 per cent, while the end of the range is likely to be about 6.5 per cent,” he said.

“Generally speaking, the stronger performers will be those that maintained a relatively high exposure to foreign currency (because of the decline in value of the Australian dollar) and Australian listed property.”

Mr Chant said the funds most likely to underperform were those with bigger exposures to Australian shares and cash.

Thousands of migrants taking a hit

Greek Government Look Set To Default On Crucial Debt Repayment
Pro-European protests in Athens attracted enormous crowds. Photo: Getty

Many retired Greek migrants living in Australia receive part pensions from both the Greek and Australian governments.

For migrants who worked most of their lives in Greece, their main source of income is the Greek government.

Since the first wave of austerity measures were introduced in 2012 many of these retirees have taken big hits on their monthly incomes.

The part-pension paid by the Australian government to these people is subject to the normal means testing, including the assets test.

It is possible that Centrelink may soon be flooded with requests from retired Greek Australians who own property in Greece.

That’s because asset values have tumbled across the country, rendering more retirees eligible for a pension.

There are also thousands of retirees living in Greece who receive a part pension from Centrelink because they worked 10 or more years in Australia.

With future Greek governments expected to make further cuts to retirement pensions, an increasing number of these people will be relying on pension payments from the Canberra to pay their gas bills.

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