Retirement Income and Alternative Investment Funds: The Australian Conundrum
The enlarged pool of funds available for investment as a consequence of the growth of superannuation in Australia has contributed to the growth of alternative investment funds, such as private equity and hedge funds. Domestic pension funds have become the largest source of funds for venture capital and later stage private equity investment vehicle in Australia. Alternative investment managers are often more activist with respect to their investments than traditional investment funds. Private equity owners in particular have been associated with business strategies that redirect income (or ‘value’) that may have previously been shared by other stakeholders including workers and suppliers to owners. Workers in Australia face the situation that superannuation funds established to provide for their income in retirement are investing in activist funds that may threaten their current income. This paper begins to examine the linkages between superannuation and alternative investment funds. It then investigates the capacity of activist investors to capture ‘value’ held by workers. It is argued that the current labour law regime in Australia, particularly the Fair Work Act 2009, makes it difficult for activist investors to leverage value from labour. However, with a review of industrial relations laws recently announced by the current conservative government the tension between current employment conditions and returns on deferred income in the form of superannuation for workers may well become more pronounced.