22 April 2020
Basically, liquidity is cash, or things that can easily be sold for cash. Illiquid assets are investments that would take longer to sell and turn into cash – for example infrastructure like airports and toll roads, or property like commercial office buildings, shopping centres and houses. Liquidity – for both individuals and companies - becomes more important than usual when the world is facing uncertainty. For individuals, if you have a lot of illiquid assets (for example, if you own several houses) and lose your job so you have no cash coming in, you may still be well off in theory but unable to pay your bills or mortgage. The same applies to companies.
Vision Super and liquidity
Vision Super has strong liquidity. We have been steadily improving our liquidity position over the last ten years. Our outstanding contractual funding obligations are small. We have also built up our ready cash position to meet the government’s new measure for members to access up to $20,000 of their own retirement savings if they have become unemployed or suffered reduced work hours due to the Covid-19 Pandemic. There’s a good explainer of how that measure works here. We have stress tested some fairly severe impacts looking forward from our current circumstances and our liquidity remains adequate to fund our obligations, albeit with a reduced margin of safety.
What does all this mean for you?
To put it simply, if you need to get money out of your super, whether it’s because you’ve met retirement age and taking a pension, or because you’re accessing the government’s emergency measure, the cash is there for you. And it will continue to be.
Vision Super has been managing our members’ retirement savings for over 70 years, through many global changes. The current circumstances are unusual, but you can rest assured that your retirement savings are in experienced hands.