Did your super deliver a record return? You should worry if it didn't

The height of the pandemic was a crazy time, with financial markets sent into a tail spin, but all of the experts said to keep your money invested, and if you listened you have been richly rewarded, according to the reports on superannuation returns for financial year 2020-21.

According to the Association of Superannuation Funds of Australia (ASFA), funds delivered average annual returns of nearly 20 per cent for the past financial year with many breaking records.

ASFA chief executive Martin Fahy said the results were amazing.

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“We would normally expect super funds to report annual returns in the order of 6, 7 or 8 per cent,” Mr Fahy said.

“Clearly this is a remarkable result – the system’s strongest performance in the nearly 30 years since compulsory superannuation began.”

Average balanced super funds have delivered around 9 per cent for the five-year returns and around 8.5 per cent for the 10-year average return.

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Superannuation research house SuperRatings said that the median balanced option was on track to deliver a return of 17.1 per cent, the second highest figure since 1992.

SuperRatings executive director Kirby Rappell said that the key drivers of this outstanding result were a rapid recovery in domestic and global equity markets since the falls of 20-30 per cent at the outset of the pandemic and strong listed property returns.

Pension returns were also outstanding, with the median balanced pension option returning 18.6 per cent over the financial year.

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“A year ago, it would have been hard to believe that the typical balanced option would be delivering a near record return for the 2021 financial year,” Mr Rappell said.

“The way in which funds have weathered the COVID-19 storm also shows the resilience of funds’ portfolios, as well as the levers they have in place to protect members when the market ride becomes bumpy.”

Mr Rappell said that he could understand why this would still be a nervous time for retirees with cash investments delivering very little return.

That situation was not helped on Tuesday when the Reserve Bank of Australia (RBA) announced that it would keep interest rates at the historically low rate of 0.1 per cent.

“While we have seen accumulation members fare well over this period, it remains a concerning time for retirees and members on the cusp of retirement for whom the challenges of deriving a meaningful income are very real,” Mr Rappell said.

“With cash and cash-like investments such as bonds offering very limited returns and income for these members, we believe it is imperative that we focus on making super more relevant for those people relying on it, and this is an area where more attention is needed.”

According to the ASFA figures, a considerable number of super fund members in the retirement phase are likely to have investment returns of over 20 per cent in the financial year given that investment returns in the retirement phase are tax free.

Cbus Super, one of the country’s largest industry super funds, announced a 19.34 per cent return for its growth option, the largest ever annual return in the fund’s 37-year history.

Cbus Super chief investment officer Kristian Fok said the outstanding result was a mix of shrewd investments and a significant reduction in investment fees.

“We have reduced investment fees by $400m since 2017, which has helped add to our returns,” Mr Fok said.

“We have seen the cost of managing a dollar of savings fall by 8 per cent compared to last year, which is a really strong outcome.”

How did your super fund perform last financial year? Were you tempted to take your money out of super at any point? Did you make the mistake of withdrawing your money at the wrong time? Why not share your experience in the comments section below?

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Written by Ben



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