AUSTRALIA - Pension fund members continued to suffer losses in the final quarter of 2008 due to the economic downturn, research shows.
The firm's quarterly pension performance survey said about 60% of the funds in its database used the same default option for pension members as for super members - typically a growth option with 61 to 80% in growth assets, mainly shares.
The other 40% of funds had a more conservative default for pension members, typically a conservative growth option (21 to 40% growth assets).
Principal Warren Chant said members should review their investment mix in light of recent market performance.
He added: "While most pension money does appear to be in growth-style options, there is a case for these members (all aged 55 or over by definition) to consider a less aggressive investment mix. While their investment timeframe might still be quite long, they generally don't have the capacity to top up their savings from fresh contributions.
"A serious market downturn, coupled with the regular withdrawal of pension payments, can deplete their capital to the point where their future financial wellbeing is irrevocably compromised."
The survey also found that while members with a conservative growth option fared better than their higher risk counterparts in 2008, they were not spared completely from the market woes.
"As with the growth options, asset allocation was vital," said Chant. "Even within the conservative growth universe, the performance gap between the best and the worst was a full 14% for the year, mainly accounted for by the funds' different exposures to listed markets."
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