A super year for super, but what's the outlook for 2022?

Despite the economic uncertainty driven by the pandemic in the past two years, 2021 delivered surprisingly positive results for superannuants.

In the 11 months to the end of November, balanced and growth super funds grew in 2021 by an average of 11.7 per cent, a figure that will almost certainly be higher when December data is released.

With interest rates remaining at historic lows, the figures represent a remarkable return on investment. And the good news is that 2022 is shaping up to be another strong year for superannuation.

Read: How your superannuation affects the Age Pension

Border restrictions are easing, and international travel is ramping up, with the world learning to manage COVID more adroitly as the pandemic enters a third year. According to personal finance and investment commentator Noel Whittaker, this will stimulate financial activity in the coming 12 months.

A cautionary note
But Mr Whittaker balances his positive prognostication with a couple of gentle warnings. He told YourLifeChoices: “Over the holidays, many households will become carried away with the excitement of reuniting with their loved ones and spend up big. The hangover will start in January when the school fees and credit card bills come in and may get worse later in the year if interest rates start rising.”

Mr Whittaker, though, believes that interest rates are unlikely to rise dramatically over the next two years. This will be a welcome forecast for over-50s who recall the rampant interest rates of the 1980s.

Read: Noel Whittaker tells what to expect – and beware of – in 2022

Mr Whittaker’s second item of cautionary advice surrounds cryptocurrency trading. He says that it amounts essentially to a form of gambling, one for which there is no consumer protection in place. “Crypto provides a fertile field for scammers,” he warned.

Is your super fund meeting performance standards?
Data released by the Australian Prudential Regulation Authority(APRA) displays the choice funds that have performed outstandingly in 2021, while industry analyst SuperRatings has released data ranking Australia’s top 10 growth funds.

But not all funds have performed to expectations, and APRA is taking a very close look at those. In August, it released its inaugural MySuper Product Performance Test. The test assessed 76 MySuper products with at least five years’ worth of performance history “against the objective benchmark”. A total of 13 products failed to meet that benchmark.

Trustees of those failed products were required to write to members by 27 September 2021 advising them of their performance test outcome and providing the details of the ATO’s YourSuper comparison tool.

Read: Super funds with responsible investment increasingly profitable

APRA executive board member Margaret Cole said this gave trustees a clear choice: “Trustees of the 13 products that failed the test now face an important choice: they can urgently make the improvements needed to ensure they pass next year’s test or start planning to transfer their members to a fund that can deliver better outcomes for them.”

To further assist investors in measuring the performance of their super funds, the Australian Tax Office (ATO) introduced a new MySuper comparison tool in July 2021, to complement the existing YourSuper tool.

The MySuper tool allows investors to view a personalised comparison of their funds with others. Users are required to log in to ATO online services through the myGov portal to access this tool.

Other changes made to superannuation in 2021 included maintaining the legislated increase to the superannuation guarantee, which increased by 0.5 per cent to 10 per cent  on 1 July 2021, and the removal of the $450 monthly income threshold for super contributions, meaning all workers, regardless of how much they earn, will be entitled to receive employer super payments.

Has your super fund performed poorly in the past year? Or has it exceeded expectations? Why not share your experience in the comments section below?

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Written by Andrew Gigacz

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