AUSTRALIA - Australia's biggest Super funds have returned an average of just 4.5% a year over the past decade as a result of the global credit crisis, figures reveal.
Research by SuperRatings found the majority of funds earned a median of almost 11% in the year to June 30, although fee payments would ensure that most members receive under 10% for the 2009/10 financial year.
While the 12-month results are a welcome improvement from the 12.7% losses suffered in 2008/09 and the 6.4% fall in 2007/08, SuperRatings managing director Jeff Bresnahan warned the magnitude of the global financial crisis was now starting to bite into longer term returns.
The rolling ten year compound return has declined from 5.4% as at 30 June 2009 to 4.5% as at 30 June 2010, now less than 2% per annum ahead of prevailing inflation, he said.
"Whilst not looking great on paper, in a relative sense balanced options have achieved what they set out to do, namely to prevent significant losses through diversification," added Bresnahan.
"Pity the poor fund member who thought the success of international shares in the 1990s would continue into the 2000s. Over the last decade international share options in super funds have lost a median of 5% per annum, every year for a decade.
"Over the same period, balanced options have gained 4.5% per annum. So, despite not being handsomely rewarded for risk in relation to cash and inflation over the same period, balanced options have at least kept ahead of both of these investments and will continue to do so over the long term".
"Notwithstanding the struggling short to medium term results for our major super funds, when Australians finally see a solid positive return on their member statement this year, we should begin to see a gradual improvement in consumer confidence when it comes to their superannuation."
Top Five Super Funds
(Balanced investment option)
1. Local Government Super Acc. Balanced Growth (12.8%)
2. BT Lifetime Super Emp. Balanced (12.4)
3. ANZ Super Adv. Managed growth (12.2%)
4. Plum, pre-mix moderate (12.1%)
5. Maritime Seafarers Accum. Balanced (11.9%)
PP has analysed the accounts of the biggest pension consulting firms and recorded the turnover (revenue) in their most recent accounts. The full leaderboard is below…
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