A great 12 months for superannuation: How did yours perform

- January 24, 2020 3 MIN READ

For many people their superannuation is now one of their biggest assets, so it’s important to keep benchmarking how your fund is performing. So when your statement comes in the next few weeks, these are the industry average figures you need to know.

Then ask yourself is your fund above or below average?

According to SuperRatings, the median balanced accumulation superannuation option returned 13.8 per cent over the year to the end of December and has returned 7.7 per cent per annum over the past decade.  

The median growth option returned an estimated 16.0 per cent over the year, while the capital stable option returned 7.0 per cent.

Last year was the best superannuation performance since 2013 and the fourth highest over the last 20 years.

Estimated accumulation returns (% p.a. to end of December 2019)

  1 mth 1 yr 3 yrs 5 yrs 7 yrs 10 yrs
SR50 Growth (77-90) Index -1.1% 16.0% 9.0% 8.2% 10.0% 8.2%
SR50 Balanced (60-76) Index -0.9% 13.8% 8.1% 7.4% 8.8% 7.7%
SR50 Capital Stable (20-40) Index -1.0% 7.0% 4.7% 4.5% 5.2% 5.4%

Source: SuperRatings

Pensions also performed well in 2019, with the median balanced option returning an estimated 14.9 per cent, compared to 18.2 per cent for the growth option and 8.0 per cent for the capital stable option.

Estimated pension returns (% p.a. to end of December 2019)

  1 mth 1 yr 3 yrs 5 yrs 7 yrs 10 yrs
SRP50 Growth (77-90) Index -1.2% 18.2% 9.9% 9.3% 11.1% 9.1%
SRP50 Balanced (60-76) Index -1.0% 14.9% 8.8% 8.0% 9.7% 8.5%
SRP50 Capital Stable (20-40) Index -1.0% 8.0% 5.4% 5.2% 5.8% 6.1%

Source: SuperRatings

The New Superannuation Rort… a new fee grab

Geez you’d think the superannuation industry would have learnt after the grilling they received from Hayne Royal Commission. They were accused of ripping off clients with low balances and charging high fees for insurance cover which people didn’t need.

So I was gobsmacked this week when Australian Super…the biggest superannuation fund in the country…sent an email to their 2 million members saying they were imposing a NEW annual administration fee of 0.04 per cent on their superannuation balances.

They explained it as “being introduced to offset the impacts of the Federal Government’s Protecting Your Super changes, which came into affect on 1 July, 2019.”

You’ll remember the Banking Royal Commission were scathing about how fees destroyed low superannuation balances and recommended they be capped. So the Feds followed the advice and capped fees on super balances of under $6000 at 3 per cent.

A good thing.

But Australian Super has used this as the excuse to impose the new 0.04 per cent admin fee on all accounts to offset the revenue they’d lose by this cap.

On a $50,000 superannuation balance it is an extra $20 a year in admin fees. So $20 across 2 million accounts is an extra $40 million in administration fees a year.

Give me a break.

Look, I have a couple of issues with this;

.Administration fees should always be a flat fee and not a percentage of a balance. This is a fee to send out statements and complete the paperwork. The size of the balance shouldn’t impact the cost of the administration of an account. It’s basically the same cost.

Remember you also pay an investment fee, which is a percentage of the balance, which compensates for any extra investment management of higher balances.

.Australian Super in the last year has already increased its annual Administration Fee from $39 to $117… yep almost tripled the fee. Now there will be another $20. By comparison HostPlus, the third biggest industry fund manager has a flat administration fee of just $78 a year.

.As the biggest superannuation fund you’d think the economies of scale from that size would actually see administration fees go down not up.

.A few people have said to me that Australian Super is a not-for-profit so it doesn’t really matter. It’s a crazy argument. A not-for-profit still needs to be run efficiently so costs to members are kept to a minimum to enable their super balances to work harder. Super funds shouldn’t be fat and lazy.

.Yes, Australian Super’s investment performance is very good. But, again, that’s no excuse not to be efficient and well run with low administration fees… it is still member’s money.  

You might also be interested in: Kochie’s Market Update: 2019 in a nutshell