Retirement
Superannuation is down but not out
Superannuation funds are set for their fourth financial year of negative growth, but it will be the mildest reduction on record, new research has found.
Superannuation is down but not out
Superannuation funds are set for their fourth financial year of negative growth, but it will be the mildest reduction on record, new research has found.
According to Lonsec’s SuperRatings, the median balanced option rose by 2.1 per cent in May as sharemarkets rallied off economies reopening.
However, May’s strong growth left superannuation financial year-to-date returns at the end of May at -1.6 per cent, leaving super funds likely to have its mildest year of negative growth.
“Super members have benefitted from recent gains, but markets are still under pressure and remain vulnerable to negative news, including a potential second wave of COVID-19 infections,” said SuperRatings executive director Kirby Rappell.
“Funds were hit hard in February and March, and some saw that as an opportunity to raise questions about the value of super. Since then we’ve had two strong months and the critics have certainly been quieter, but we know there’s a long way to go before super balances return to a more stable footing.”
Since the start of 2020 to the end of May, the median balanced option fell an estimated 5.7 per cent, with the 12-month return holding in positive territory at 0.5 per cent.
In contrast, Australian shares, measured by the S&P/ASX 200 index, fell 13.9 per cent over the calendar year to May and are down 10.0 per cent over 12 months.
The median growth option, which generally has a higher exposure to shares and other risk assets, is down an estimated 6.8 per cent in 2020 and is up 0.5 per cent over 12 months, while the capital stable option fell only 2.1 per cent since the start of 2020 and rose an estimated 1.2 per cent over 12 months.
Super funds still meeting their long-term objectives
Despite the challenge that COVID-19 poses to financial markets, superannuation has proved resilient, much as it did during the global financial crisis of 2008 and 2009.
Remarkably, since 1992, the median balanced option has returned an average of 7.0 per cent per annum, which is well above the common long-term objective of CPI plus 3.5 per cent
“Super members may understandably feel disillusioned after watching their balances go down through February and March,” said Mr Rappell.
“But super is a long-term game, and members should be cognisant of the steady gains super has delivered over a long period of time and will continue to deliver into the future.”
“What really matters for most members is whether funds are meeting their long-term objective, and by this metric, super has been an incredible success. Funds came back strongly after the GFC and there’s good reason to believe they’ll do the same this time around.”
Did you enjoy this article? You may also be interested in:
- Industry expert slams super release
- Jones calls to end the war on super
- Superannuation takes $230bn hit
RELATED ARTICLES
About the author
About the author
Superannuation
Survey reveals Australians' reliance on superannuation for retirement
A new survey by AustralianSuper has found that only 32% of Australians believe they could save for retirement without compulsory superannuation. Read more
Superannuation
AMP launches national campaign to boost super engagement
AMP has unveiled a new national advertising campaign aimed at encouraging Australians to engage more actively with their superannuation. Read more
Superannuation
AustralianSuper urges action on gender pay gap for Equal Pay Day
AustralianSuper, Australia's largest superannuation fund, is calling for increased focus on the gender pay gap and its long-term impacts on women's retirement savings this Equal Pay Day, August 19. Read more
Superannuation
AMP advisers focus on super contributions and home ownership queries
Financial advisers are prioritizing assistance with superannuation contributions, transfer balance caps, death benefits, and home ownership issues, according to recent data from AMP Advice. Read more
Superannuation
Aware Super reports strong 11.02% return for flagship investment option
Aware Super, one of Australia's largest superannuation funds, has announced an 11.02% return for its High Growth accumulation option in the 2024 financial year. Read more
Superannuation
Retirement savings strategies: How to boost your superannuation
Superannuation is a pivotal part of retirement planning in Australia, offering a tax-effective way to save for your later years. As you navigate through your working life, enhancing your ...Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Survey reveals Australians' reliance on superannuation for retirement
A new survey by AustralianSuper has found that only 32% of Australians believe they could save for retirement without compulsory superannuation. Read more
Superannuation
AMP launches national campaign to boost super engagement
AMP has unveiled a new national advertising campaign aimed at encouraging Australians to engage more actively with their superannuation. Read more
Superannuation
AustralianSuper urges action on gender pay gap for Equal Pay Day
AustralianSuper, Australia's largest superannuation fund, is calling for increased focus on the gender pay gap and its long-term impacts on women's retirement savings this Equal Pay Day, August 19. Read more
Superannuation
AMP advisers focus on super contributions and home ownership queries
Financial advisers are prioritizing assistance with superannuation contributions, transfer balance caps, death benefits, and home ownership issues, according to recent data from AMP Advice. Read more
Superannuation
Aware Super reports strong 11.02% return for flagship investment option
Aware Super, one of Australia's largest superannuation funds, has announced an 11.02% return for its High Growth accumulation option in the 2024 financial year. Read more
Superannuation
Retirement savings strategies: How to boost your superannuation
Superannuation is a pivotal part of retirement planning in Australia, offering a tax-effective way to save for your later years. As you navigate through your working life, enhancing your ...Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
