Super fund members warned about the dangers of switching

February delivers negative return but long-term performance still positive.

Super fund members warned about the dangers of switching

Older Australians concerned by recent market volatility should reflect on the significant gains super funds have made since the start of the bull market in 2009.

Despite February delivering the first negative monthly return in more than 12 months, super funds have returned an average of 117 per cent since the global financial crisis (GFC) nine years ago.

While one month of negative returns may prompt many Australians to switch funds, SuperRatings CEO Kirby Rappell warns of the dangers in doing so.

“The lesson for superannuation members is that a focus on long-term performance is essential,” said Mr Rappell.

“While members may feel unnerved by recent volatility, it is impossible to ignore the significant gains that super funds have delivered since the start of the bull market in 2009.

“After nine years, you might say the global share market rally is getting a bit long in the tooth, but this is at odds with the economic data, which is pointing to a strengthening economy.

“Market corrections, while they can cause members to panic, are often a necessary check against bubbles. What the recent volatility tells us is that the market is capable of self-reflection, and that investors are focused on valuations as well as the broader economic picture.”

Aside from Mr Rappell’s concerns about switching super funds, there is still evidence that your choice of fund makes a massive difference to your bottom line. The difference between the best performing and worst performing funds since 2009 is significant. 

According to SuperRatings’ return data for the 10 years to 31 January 2018, REST is the top performing fund among balanced option accumulation funds, returning an average of 7.0 per cent per year over 10 years. CareSuper comes in second, returning 6.9 per cent per year. All top 10 funds delivered in excess of CPI plus targets.


While CareSuper is the second-best balanced fund option, it takes out the top spot in growth funds, returning an average of 7.3 per cent a year over 10 years. Energy Super came in second, returning 7.3 per cent.


During the accumulation and pension phase, balanced funds may still be the most popular option, but growth option performance is becoming increasingly relevant, with member allocation to higher growth options increasing from 8.4 per cent to 13.6 per cent since 2008.


How has your super performed? Are you concerned about February’s downturn?



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    19th Mar 2018
    Whether high growth or low risk, never mind! If you have less than $400'000 in super by the time you reach pension age it will all be counted as an asset in the future with this Govt. So do yourself a favor: spend the stuff and try to live with the full age pension and associated benefits. If you have 1.5 million maybe you would live a better life but you would still have to look over your shoulder for the grabbing Govt. hand.
    19th Mar 2018
    Yes there isn't much sense saving diligently simply to end up losing the old aged pension and discounts and paying yourself a similar amount but having full costs as you don't get a pension card.

    19th Mar 2018
    This Government is doing a great job of spending our super. Turnbull wants to give $3 Trillion of it towards building American roads.
    19th Mar 2018
    People warned that this is what would happen if we saved a heap of money the government controlled.
    20th Jul 2018
    Hi girls, I don't know where you get this nonsense from.
    The Government has not spent any of my Super in the last 25years.
    Mal Turnbull is not giving money to build American Roads
    19th Mar 2018
    Yep, bit less than $400K is the sweet spot, full pension. Also Industry Super Funds give best growth !!
    almost a grey hair
    19th Mar 2018
    exactly right, and that is exactly where we will be when I get there in four yrs time, two for my wife. House paid for - pool in the back yard - new car in the garage and we will be $1 under the line. Why because we take an interest, we are alert to changes and most importantly we did the hard yards all the way through and did not rely on some nice person to help us out. Fortunately we were healthy and fit almost to the end.
    19th Mar 2018
    Super is a rort unless you have more than $1.6M you are better off yanking it out and investing it where the Government of the day can't keep dipping into it. I read a remarkable story this morning on ABC that the young un's are wailing that superannuants are holding them back - whilst of course ignoring that it's not the oldies, but the neoliberal attitudes of Governments that keep unemployment and underemployment at high levels while they impose austerity to balance this mysterious thing called the national budget. Anyone notice how the corporate lobbyists shriek in horror when any measure at removing corporate welfare is proposed by Government? Never mind that the monetary system is fiat and that banks can create as much money as there are credit worthy clients. This intergenerational meme is a crock, the same as the country is struggling blah blah. This is one of the most resource rich countries in the world. The problem is that 1% of the population are living high on the hog while the rest of us fight for scraps. Revolution anyone?
    19th Mar 2018
    It'll come the question is when.
    19th Mar 2018
    Jackie he will gladly spend our money as long as it not his own, trump did not make billions being nice, getting it back could be a problem
    19th Mar 2018
    dreamer...Australians will never get it back they is why the want them all to work till they drop.
    19th Mar 2018
    If I had known what Bill and Malcolm had in mind I would have switched right out of super altogether,this retirement disaster is not finished by a long shot.
    19th Mar 2018
    Blowing your super and believing you can live on the age pension is a dangerous folly.

    Much better to put your $400,000 (or whatever) into a pension fund and live off the income while slowly spending down the capital.

    The age pension is nowhere near enough for a decent living.

    Tax payers have no obligation to preserve some retirees capital for their kids to inherit.

    Most of those moaning over a few thousand going Treasury, are sitting on hundreds of thousands of dollars and more. Gob smacking cupidity.
    20th Mar 2018
    You hit the nail right on the head with your comment that it is not the responsibility of the taxpayer to preserve capital for kids to inherit - absolutely spot on - couldn't agree more. Now if we could convince all oldies to come to that point of view, maybe we could then get some commonsense discussion going on superannuation, and the OAP (and the family home - included as an asset or not?).
    20th Mar 2018
    Big Al - instead of including the family home in the assets test and thus depriving the people living there of an income, why not give them the full age pension and then charge death duties upon their passing (capital taxes) before the kids get the proceeds of a sale. Should kids decide to keep the oldies' home for themselves they will pay the same duties. The tax payer wins and the old folks would not be forced out of their place.
    19th Mar 2018
    The other problem with switching funds is that it ENDs any grandfathering you have on your account. Not deliberately hidden I guess, but not often advised verbally by either fund when transferring to another!! Or in advertising to amalgamte your funds. Grandfathering doesn't always apply but take this warning into account and find out.
    19th Mar 2018
    Good comment Wheels. However it only hints at the potential problems/issues.
    Question is. Would you know what are the likely examples of $$ amounts or benefits that are being received (or could currently being received), that would discontinue if grandfathering ceased due to switching funds. Had a look at this site which did not assist to any great amount.
    Retiring Well
    19th Mar 2018
    Yes my super is grand fathered and if I switch it I will lose my OAP. I guess I'll have to hope Bill doesn't win next election or I lose about $20,000 a year in franking credits,
    19th Mar 2018
    Bear - I will keep my fingers crossed!!
    19th Mar 2018
    John, your super is not counted in the invome test if you were receiving some OAP before 1 January 2015. If you switch funds, or change products it will no longer be grandfathered but counted in the income test. Depending on how much you have in Super you will lose some, or all of your OAP
    22nd Jul 2018
    thanks for info Sundays, have been away so hadnt seen this till now

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