Superannuation continues its recovery

Superannuation-recovery

Market stability and continued momentum in shares helped to bolster account balances in August.

However, while consumers and investors are looking ahead to a ‘COVID normal’ world, the recovery is highly dependent on infection rates and the gradual easing of restrictions across the country.

According to estimates from leading superannuation research house SuperRatings, the median balanced option returned 1.8 per cent in August, taking the financial year to date return to 2.9 per cent. But be wary of further market volatility as the global pandemic rolls on.

Accumulation returns to end of August 2020

 CYTD1 yr3 yrs (p.a.)5 yrs (p.a.)7 yrs (p.a.)10 yrs (p.a)
SR50 Growth (77-90) Index-3.0%0.7%6.4%7.1%7.8%8.2%
SR50 Balanced (60-76) Index-2.4%0.8%5.9%6.3%7.1%7.7%
SR50 Capital Stable (20-40) Index-0.4%0.7%3.8%4.1%4.7%5.1%

Source: SuperRatings estimates

Pension returns have fared modestly better over the past year. The median balanced pension option is estimated to have risen 0.9 per cent over the 12 months to August, while the growth option is estimated to have risen 1 per cent and the capital stable option 0.9 per cent.

Pension returns to end of August 2020

 CYTD1 yr3 yrs (p.a.)5 yrs (p.a.)7 yrs (p.a.)10 yrs (p.a)
SRP50 Growth (77-90) Index-3.2%1.0%7.0%7.9%8.7%9.1%
SRP50 Balanced (60-76) Index-2.4%0.9%6.3%7.0%7.7%8.4%
SRP50 Capital Stable (20-40) Index-0.6%0.9%4.4%4.6%5.2%5.7%

Source: SuperRatings estimates  

Taking a long-term view, super returns have done an incredible job at accumulating wealth for retirees over a period that includes two major financial and economic crises. 

According to SuperRatings’ data, since August 2005, a starting balance of $100,000 would now be worth $238,286 for members in a balanced option. For a growth option this would be $239,917. A member with full exposure to Australian shares would have seen their balance growth to $255,883. In contrast, returns on cash would have seen the balance grow to only $157,193.

Growth in $100,000 invested over 15 years to 31 August 2020

Source: SuperRatings estimates

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