Whoopsie! Aussies Lose Pensions Big Time in Cryptocurrency Market

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Australian pensioners who have put their golden egg in the crypto basket have been hit with a harsh reality check after losing a fortune in the volatile cryptocurrency market – ouch!

Hundreds of millions in losses threaten the retirement savings of thousands of Australians who gambled on cryptocurrencies via DIY pension funds—funds initially created to guarantee an adequate income upon their retirement.

Since DIY or self-managed superannuation funds (SMSFs) are outside of the remit of the prudential regulator that oversees professionally managed funds, they can take more significant risks when it comes to investments due to fewer restrictions place.

A staggering one-fourth of Australia’s enormous $2.29 trillion pension pool comprises DIY pension funds, with tens of thousands set up during the pandemic alone. This money – intended to be saved for retirement – has been invested in various markets and even cryptocurrency. 

However, regulatory bodies have limited power to ensure these are relatively safe decisions.

Peter, a 50-year-old self-proclaimed “bitcoiner,” is content to remain undeterred by potential warnings from outside sources.

In 2021, he transferred his A$130,000 retirement savings into a Self-Managed Super Fund (SMSF) and invested it in Bitcoin. Initially, the fund soared to an all-time high of A$100,000 – But unfortunately, it is now experiencing losses after bitcoin prices crashed.

Nevertheless, Peter persists in investing in bitcoin.

“I’m still just as convinced,” Peter declared, preferring not to reveal his full name to maintain his finances’ secrecy.

“After a decade of this experience, I’m no longer fazed by the cost; internally, it’s become something that doesn’t even move me anymore.”

Peter is not the only one who experiences this.

Australia’s Tax Office reports that although cryptocurrencies remain a minority of investments, their popularity steadily increases.

A$880 billion is held in Self-Managed Super Funds (SMSFs) across Australia, with crypto assets contributing an estimated $1.4 billion in 2021 and likely more since then.

Regulatory regulations demand that investors hold onto assets for retirement, audit, and recognise the associated risks, yet need to be made aware of whether SMSF investments are appropriate.

Unlike the supervision of Australia’s A$2.3 trillion professionally managed pension sector, where underperforming funds can be prohibited from gaining new members, the regulation in some other countries is much more lenient.

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