The average MySuper default fund, where most Australians have their super, fell in value by 4.3 per cent in 2022. If you had $200,000 in your super, it would mean a drop in value of $8000.
The total loss to Australia’s super industry was around $150 billion – the worst annual result since the Global Financial Crisis (GFC).
Alex Dunnin, director of research at analysts Rainmaker International, told the ABC: “This is broadly the equivalent to all the money contributed into superannuation last year.
“Long story short, last year’s loss pretty much wiped out a year of total contributions.”
Read: New report suggests super withdrawal rate increase in 2023
The falls were driven by a perfect storm of global calamities including Russia’s invasion of Ukraine, the lingering effects of the pandemic and inflation.
On top of that, Australians were dealt eight consecutive official interest rate rises, with another four rate rises predicted this year – the first next Tuesday.
You could be forgiven then, for feeling a bit pessimistic about the outlook for super in 2023. But Mr Dunnin says there are signs this year could be better.
“The view beginning to creep in around the world is, perhaps inflation has done its dash and it might come down,” he says.
Read: Which two super funds saw positive returns in 2022?
“If it starts to calm down, then interest rates won’t need to keep going up, or not as aggressively as they were, or they won’t need to rise as often as they were last year. That starts to tell people, perhaps we’re through the worst of it.”
Mr Dunnin says the super industry has seen conditions like this before and bounced back quickly.
“When we had the global financial crisis, we had super returns get down to minus 20 per cent … it was an absolute bloodbath,” he says.
“But within two years, we’d recovered.”
Read: Australians are getting older. Is your super fund ready?
Mano Mohankumar, senior investment research manager at Chant West, echoed the positive sentiment and was quick to remind members that last year’s negative result was an exception and not the rule.
“This [2022] was the first negative calendar year since 2011 and only the fifth in the full 30 years of compulsory super,” he says.
“It also comes on the back of a particularly strong 2021, so perhaps we were due for a return to earth given the challenging investment backdrop.
“Most importantly, members should take comfort in the fact that funds are continuing to meet their long-term return objectives – and they’re doing so by a comfortable margin.”
How did your super perform last year? How do you expect it to perform this year? Let us know in the comments section below.
Brad, are the predictions from these so- called experts ever compared to the actual results?