Super funds emerge from one year of the pandemic in a strong position

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The World Health Organization (WHO) declared COVID-19 a pandemic on 12 March last year, sending financial markets into a spin and putting pressure on the retirement savings of millions of Australians.

Since then, markets in Australia and around the world have recovered, and super funds have definitely recovered those early losses, but the situation is still more volatile than it was pre-COVID, according to a leading superannuation research house.

SuperRatings explains that while the vaccine rollouts under way around the globe are lifting market confidence and returning conditions to normal, the situation is still a long way from the stability the world knew before the pandemic.

Read more: Turnbull supports super increase

According to SuperRatings data, the median balanced option rose an estimated 0.7 per cent in February and the median growth option rose an estimated 1.1 per cent, while the median capital stable option fell an estimated 0.1 per cent.

Over the 2021 financial year to date, the median balanced option returned 9.7 per cent, reflecting the strength and speed of the post-pandemic recovery, which has been extended through the start of 2021.

SuperRatings executive director Kirby Rappell said news that the government’s vaccine program would move to stage 1b from next Monday, with health professionals to soon deliver up to 500,000 vaccinations a week, the signs were good for super.

Read more: Are you paying less in super fees?

“Super has notched up another positive month, thanks to the vaccine narrative and the relative strength of Australia’s economic recovery, which has exceeded expectations,” Mr Rappell said.

“Markets are still bumpy and members should not be surprised to see the value of their super fluctuate over the course of 2021.

“With the severe shock of the pandemic now behind us, the challenge will be gradually transitioning away from government support programs and getting households and businesses back on a sustainable footing.”

Read more: The super funds that outperform all others

Pension returns were also positive in February.

The median balanced pension option returned an estimated 0.6 per cent over the month and 10.3 per cent over the financial year to date.

The median pension growth option returned an estimated 1.1 per cent, whereas the median capital stable option was down an estimated 0.2 per cent through the month.

According to SuperRatings, the pandemic has been a critical case study for super funds and will inform the way they manage risks and respond to member needs into the future.

“A lot is happening in super at the moment, from regulatory change to further consolidation,” said Mr Rappell.

“Funds have shown they are able to adapt to rapid changes on these fronts, while also managing risks and attending to the needs of members through a challenging market.

“The pandemic period will serve as a masterclass in change management for superannuation that will lead to a more robust and agile industry in the long run.”

How has your super fund performed over the past 12 months?

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Written by Ben


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