Markets continue to display volatility, with the invasion of the Ukraine heightening already elevated geopolitical tensions and supply chain pressures around the world.

Leading superannuation research house SuperRatings estimates that the median balanced option fell by 0.8% in February. However, over the financial year to date members have seen an estimated return of 1.4% for the median balanced option.

Kirby Rappell, Executive Director of SuperRatings commented, “There is a lot of uncertainty across the globe, which is amplifying ups and downs across investment markets. The latest supply shock following the war between Russia and the Ukraine places further pressure on the cost of living and inflation levels and adds to the likelihood interest rate rises are approaching.”

“We continue to reinforce our previous messages regarding the importance of taking a long-term view when it comes to your superannuation. While the latest global events are extremely concerning, most members are decades away from retirement. This means they have time to recover from any volatility incurred in the short-term.”

The median growth option is down an estimated 1.1%. The capital stable option, which includes more defensive assets like bonds and cash, has fared relatively better, falling only 0.6%.

Accumulation returns to February 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index -0.8% 8.7% 7.4% 7.6% 6.8% 8.5%
SR50 Capital Stable (20-40) Index -0.6% 3.9% 3.8% 4.1% 4.0% 5.1%
SR50 Growth (77-90) Index -1.1% 10.0% 8.6% 8.8% 7.5% 9.5%

Source: SuperRatings estimates

Pension returns have also fallen in February, with the median balanced pension option down an estimated 1.0%, compared to a fall of 1.1% for the median growth option and 0.6% for the capital stable option.

Pension returns to February 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index -1.0% 8.9% 8.2% 8.2% 7.3% 9.4%
SRP50 Capital Stable (20-40) Index -0.6% 4.3% 4.3% 4.7% 4.3% 5.6%
SRP50 Growth (77-90) Index -1.1% 10.1% 9.2% 9.4% 8.3% 10.5%

Source: SuperRatings estimates

Retirees and members approaching retirement are already facing challenges when it comes to deriving a meaningful level of income in retirement, due to ongoing record low interest rate levels. This is compounded by stresses for many of the potential timing of transitioning to retirement.

The key concern for these Australians is the impact of withdrawing their funds at a time when the market has been impacted by some falls in asset prices. Maintaining a long-term view is vital, we encourage people to speak to their fund or financial adviser before making any changes to their superannuation. Knee-jerk reactions could lead to poor outcomes if these aren’t in line with your long-term financial goals.

The typical balanced option has delivered a return of about 8-9% per annum for super and pension members over the last ten years, emphasising that while we have seen negative performance over the month, the longer-term picture remains positive.

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For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725

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