A superannuation fund manager has warned Australians against voluntarily topping up their retirement while assuming the worst is over in the share market.

MB Super founder David Llewellyn-Smith said the worst global trade war since the 1930s meant superannuation balances were still likely to go backwards as Donald Trump continued to change his mind. 

‘I’d just caution that, this is really unprecedented – this is like one guy doing this,’ he told Daily Mail Australia.

‘If you think you’ve got some insight into the mind of Donald Trump that nobody else has, then sure, put your super in.’

Share markets rebounded quickly during Covid in 2020 when governments around the world individually pumped hundreds of billions of dollars into the economy. 

But the possibility of more tit-for-tat tariffs in 2025 meant a quick share market recovery would be unlikely, unless the Trump Administration undid its tariffs in the face of an American political backlash.

The US is now threatening China with tariffs to up that to 104 per cent after Beijing responded in kind with 34 per cent tariffs on American goods.

Trump’s tariffs are unleashing the worst global trade wars the 1930 Smoot-Hawley Tariff Act in the US – making voluntary contributions to super an unwise idea in 2025.

A superannuation fund manager has advised Australians against voluntarily topping up their retirement savings thinking the worst is over in the share market (pictured is the Australian Securities Exchange in Sydney)

A superannuation fund manager has advised Australians against voluntarily topping up their retirement savings thinking the worst is over in the share market (pictured is the Australian Securities Exchange in Sydney)

‘Can you read this guy? It really comes down to that question. His history is so volatile that I would say no,’ he said.

‘If he turns out to actually be dedicated to these tariffs, especially the larger ones on China, and it results in escalation as it did with the Smoot-Hawley tariffs, then the last thing you want to be doing is throwing good money after bad.’

Mr Llewellyn-Smith said topping up super would have been a good idea during a credit crunch like the Global Financial Crisis in 2008 and 2009, as governments spent big stimulating the economy.

‘Typically, I would say it was a good idea,’ he said.

‘Were we in a different kind of shock – a credit shock for instance, a business cycle shock – at this point, we’d probably be buying stocks and I’d be saying to people, “It’s probably not a bad time to be tipping money into superannuation”.

‘But it’s the idiosyncrasies of this moment where you’re relying on Donald Trump to either back down on his tariffs or not escalate the tariffs.’

Mr Llewellyn-Smith predicted a flood of cheap goods into Australia from Asian nations, slapped with prohibitive American tariffs of at least 30 per cent, would in fact bring about deflation, where consumer prices fell.

This was expected to occur, even with the Australian dollar at a five-year low of 60 US cents, which would normally make imports more expensive. 

But the possibility of more tit-for-tat tariffs in 2025 meant a quick share market recovery would be unlikely, unless the Trump Administration undid its tariffs (Trump is pictured)

But the possibility of more tit-for-tat tariffs in 2025 meant a quick share market recovery would be unlikely, unless the Trump Administration undid its tariffs (Trump is pictured)

‘You’re talking $750billion worth of Chinese goods that are going to need to find another home – anyone who’s not putting up tariffs is going to get inundated with cheap goods,’ he said.

‘If the tariffs persist, you’re pretty likely to have some kind of global recession. 

‘We’re going to be hit by deflation, not inflation, because of these tariffs, that liberates the RBA to cut.’

This would give the Reserve Bank the impetus to keep cutting interest rates to fight off a recession – in turn leading to even higher property prices.

‘If you’re in property, I wouldn’t be selling,’ he said.

‘I don’t think property’s going to get hurt by this – the likelihood is that as these shocks flow through, interest rates will fall, Canberra will keep immigration strong and so you’ve got this sort of, traditional property price appreciation cycle.’

Australia’s Big Four banks are now forecasting four rate cuts by Christmas which would see the RBA cash rate fall to 3.35 per cent for the first time since March 2023 – down from 4.1 per cent now.

‘If you do get tariff war escalation, definitely you could see the RBA go to 50 basis point cuts,’ he said. 

MB Super founder David Llewellyn-Smith said the worst global trade war since the 1930s meant superannuation balances were likely to still go backwards

MB Super founder David Llewellyn-Smith said the worst global trade war since the 1930s meant superannuation balances were likely to still go backwards

The cash rate could below the three per cent level, with the Australian share market losing 14.2 per cent of its value since peaking in mid-February, marking the sharpest downturn since the start of Covid in March 2020.

It recovered on Tuesday, following a $120billion plunge, but the benchmark S&P/ASX200 is still at the lowest level since January last year. 

‘What is driving this sell-off is so atypical that I just simply don’t know what’s going to happen,’ Mr Llewellyn-Smith said.

Even before the Trump tariffs came into effect, super funds that only had growth assets like shares fell by 1.7 per cent in February, Chant West data showed.

The losses are likely to be worse in March when those details are released.

Conservative super funds, geared towards fixed-income assets like government bonds, were flat in February. 

Australians can voluntarily top up their super beyond the compulsory employer level of 11.5 per cent. Those earning less than $250,000 a year are taxed at 15 per cent on contributions up to $30,000.

During the start of Covid in early 2020, the share market lost a third of its value in six weeks but regained its peak a year later after RBA interest rates were cut to a record-low of 0.1 per cent. 

But the GFC took longer, with the November 2007 peak not reached again until June 2019. 

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