Lonsec Retirement Perspectives Archives

Media release: October sees further super return volatility

Leading research house SuperRatings estimates October will see super funds post negative investment performance for the third consecutive month, with the median balanced option expected to post a return of -1.6% for the month of October.

“We have observed continued uncertainty around global markets and inflation, which has weighed on returns from shares,” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option similarly experienced a negative return of an estimated -1.9%, while the median capital stable option experienced a more modest decline of -0.8% owing to a lower exposure to shares.

Accumulation returns to October 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-1.6%	4.2%	5.9%	5.7%	6.3%	6.5%
SR50 Capital Stable (20-40) Index	-0.8%	2.9%	2.2%	3.0%	3.5%	4.1%
SR50 Growth (77-90) Index	-1.9%	4.9%	7.2%	6.7%	7.6%	7.5%

Source: SuperRatings estimates

October also saw pension returns fall, with the median balanced pension option returning an estimated -1.8%. The median growth option is also estimated to see a decline -2.2% for the month, while the median capital stable pension option is estimated to deliver a -0.9% return.

Pension returns to October 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-1.8%	4.8%	6.4%	6.3%	7.1%	7.2%
SR50 Capital Stable (20-40) Index	-0.9%	3.3%	2.6%	3.3%	3.9%	4.4%
SR50 Growth (77-90) Index	-2.2%	5.3%	7.9%	7.5%	8.4%	8.3%

Source: SuperRatings estimates

While data suggests a inflation is moderating, it remains persistently above target and we saw the RBA provide a Melbourne Cup rate rise accordingly. Along with the US Federal Reserve leaving open the possibility of further rate rises to quell their own inflation, the share market rally we have witnessed in November so far may be not be sustainable.

“Despite the uncertain environment of the past quarter, returns remain positive over 1 through to 20 years. Superfunds continue to display strong capabilities in navigating uncertain market environments and members have been experiencing increased levels of ups and downs for some time now” commented Mr Rappell. “Our message to members remains one of focusing on the long term and sticking with their long-term investment strategy. The ups and downs are likely to continue, and members who are thinking about changing their strategy are encouraged to contact their fund, or speak with a trusted adviser, before making any changes.”

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

November 9, 2023/by Kirby Rappell

Media release: Super returns continue bumpy ride in September

Funds are estimated to post negative returns for the second month in a row in September, with leading research house SuperRatings estimating the median balanced option will return -1.8% for the month, as investors adjust to the increased likelihood of interest rates remaining higher for longer. Despite these challenges, the median balanced option return for the 3 months to 30 September 2023 is estimated to be a modest -0.4% fall.

“We observed an acceleration of the August performance trend in September as both international and Australian equities weighed on returns, with sticky inflation the key concern for markets” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option fell by an estimated -2.2%, while lower exposure to shares resulted in the median capital stable option delivering a smaller loss of -1.1% for September.

Accumulation returns to September 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-1.8%	9.0%	6.6%	5.3%	6.3%	6.9%
SR50 Capital Stable (20-40) Index	-1.1%	5.1%	2.7%	2.9%	3.5%	4.3%
SR50 Growth (77-90) Index	-2.2%	11.0%	8.2%	6.2%	7.8%	8.0%

Source: SuperRatings estimates

Pension returns also fell in September, with the median balanced pension option falling an estimated -1.8%. The median growth option is estimated to decline -2.3% for the month while the more defensive median capital stable pension option is estimated to deliver a -1.2% return.

Pension returns to September 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-1.8%	10.6%	7.3%	5.9%	7.2%	7.6%
SR50 Capital Stable (20-40) Index	-1.2%	5.6%	3.0%	3.2%	3.9%	4.6%
SR50 Growth (77-90) Index	-2.3%	12.1%	8.7%	6.9%	8.5%	8.7%

Source: SuperRatings estimates

The trajectory for interest rates and geopolitical tensions are likely to remain as the dominant drivers for superannuation returns over the coming months. While returns fell over the month, relative to the broader market, funds continue to outperform equities due to the benefits of diversification.

“Super funds continue to display strong capabilities in navigating uncertain market environments and members have been experiencing increased levels of ups and downs for some time now” commented Mr Rappell. “Our message to members remains one of focusing on the long term and sticking with their long-term investment strategy. The ups and downs are likely to continue, and members who are thinking about changing their strategy are encouraged to contact their fund, or speak with a trusted adviser, before making any changes.”

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

October 12, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, Media releases

Media release: Super funds feel modest headwinds during August

After a positive start to the new financial year, super fund returns faced modest headwinds in August with the median balanced option delivering an estimated return of -0.1% according to leading superannuation research house SuperRatings.

The trajectory for inflation remains a key driver for markets with uncertainty around central bank’s rates pathway remaining front of mind. Both Australian and global equities reported small declines over the month with diversification continuing to benefit members in reducing underperformance.

The median growth option fell by an estimated -0.3%, while lower exposure to shares resulted in the median capital stable option delivering a small positive result, with an increase of 0.1% for August.

Accumulation returns to August 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.1%	7.7%	7.1%	5.7%	6.6%	7.2%
SR50 Capital Stable (20-40) Index	0.1%	4.2%	3.0%	3.1%	3.6%	4.5%
SR50 Growth (77-90) Index	-0.3%	9.3%	8.5%	6.6%	8.1%	8.4%

Source: SuperRatings estimates

Pension returns followed a similar trend over the month, with the median balanced pension option falling an estimated -0.1%. The median growth option is estimated to decline -0.2% in August while the more defensive median capital stable pension option is estimated to deliver a 0.1% gain.

Pension returns to August 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.1%	8.7%	7.7%	6.3%	7.5%	7.9%
SR50 Capital Stable (20-40) Index	0.1%	4.7%	3.4%	3.4%	4.1%	4.9%
SR50 Growth (77-90) Index	-0.2%	9.8%	9.1%	7.4%	8.9%	9.2%

Source: SuperRatings estimates

“Market uncertainty persists, and we continue to expect monthly fund returns to bounce around” commented Executive Director of SuperRatings, Kirby Rappell, “However, over the long term, we know funds have a strong record of performing above objectives. The key message for most members is ensuring their settings are right for the long term in order to provide dignity in retirement.”

Monitoring investment performance is a good hygiene factor for members and the results of the latest annual performance test were recently released. The test has had a significant impact on MySuper default products over the past three years with the only MySuper product to fail the test this year already being closed to new members. The test was also expanded to a broader range of products this year and members who are invested in a failing product will soon be receiving a letter from their fund. If you do receive that letter, make sure you review your investment option or speak with a trusted adviser to understand why it failed and if it’s still suitable for you.

“We’ve seen a more subdued return for super funds over August, however the strong returns in July mean performance remains positive overall for the new financial year. We encourage members to focus on the longer term and be prepared to see more ups and downs over the coming months” concluded Mr Rappell.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

September 12, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, Media releases

Media release: Super funds end out financial year with strong June returns

Equity markets remained strong over June with the superannuation industry closing out the year with returns that more than made up for last year’s losses. Leading superannuation research house SuperRatings estimates that the median balanced option returned 1.2% over the month of June, strengthening an already positive annual return to 8.5% for the year to 30 June 2023. This follows on from the -3.4% return last financial year, demonstrating the industry’s ongoing ability to navigate an uncertain market environment.

Executive Director of SuperRatings, Kirby Rappell said, “While there are significant conversations about interest rate rises, inflation and global uncertainty front and centre within the economy, it is reassuring to see superannuation funds’ ability to deliver a competitive outcome for everyday Australians.”

Mr Rappell continued “While economic pressures are hard to ignore, superannuation continues to perform well on a long-term basis with most funds managing to keep performance in line with the typical CPI+3.0% investment objective over 10 and 30 years. We expect funds may struggle to meet their inflation plus objectives over the short term, particularly as inflation remains elevated; however, super funds have done well to capitalise on the opportunities available to ensure members’ super account balances continue to grow. While the current cost of living is certainly putting pressure on many Australians, superannuation continues to play its part for people’s longer term financial outcomes.”

The median growth option returned an estimated 1.4% over the month, while capital stable options which hold more traditionally defensive assets such as cash and bonds returned 0.3%.

Accumulation returns to June 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	1.2%	8.5%	7.4%	5.7%	6.8%	7.4%
SR50 Capital Stable (20-40) Index	0.3%	4.5%	3.1%	3.1%	3.7%	4.5%
SR50 Growth (77-90) Index	1.4%	11.1%	9.0%	6.8%	8.2%	8.7%

Source: SuperRatings estimates

Pension returns also ended the financial year strongly, with the median balanced pension option up an estimated 1.3% over June. The median growth option rose by 1.6% while the median capital stable option is estimated to deliver a 0.3% return for the month.

Pension returns to June 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	1.3%	9.8%	8.2%	6.4%	7.7%	8.3%
SR50 Capital Stable (20-40) Index	0.3%	5.1%	3.7%	3.5%	4.2%	5.1%
SR50 Growth (77-90) Index	1.6%	12.2%	9.6%	7.5%	9.2%	9.4%

Source: SuperRatings estimates

Super Performance Continues to Exceed Targets

The chart below shows that the average annual return since the inception of the superannuation system is 7.1%, with the typical balanced fund exceeding its long-term return objective of CPI+3.0%.

This year international equities were the standout performers for super funds, with Australian equities and listed property also supporting the strong performance over the year. Unlisted assets, such as unlisted property, have placed a bit of a drag on returns, with a significant number of funds writing down unlisted valuations. These assets have performed well over the long term and provided crucial diversification within portfolios. More defensive options had a tougher year with smaller allocations to equities and a relatively subdued return from fixed interest, however cash options did provide a small silver lining as returns rose off the back of central bank rate rises.

We continue to emphasise the importance of setting a long-term strategy for your superannuation. Despite the strong performance over the past year, we suggest members remain alert, but not alarmed, and review their longer-term settings, such as whether they are in the most appropriate investment option for their situation and check their fees, when they check their annual statements.

Mr Rappell commented, “12 months ago, we did not anticipate an 8% return for this year and so, many people would see this as a positive. Further, long term returns remaining strong. However, we expect the ups and downs observed over the last 12 months to continue and members should be prepared for their balances to fluctuate. If you are not approaching or in retirement, keep in mind that all market movements in the short term are not likely to be what you are thinking about when you retire in 20 or 30 years time.”

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

July 6, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, Media releases

Media release: Super fund performance remains strong despite market uncertainty

Stubbornly high inflation and a return to tightening monetary policy by the Reserve Bank of Australia has led to persistent uncertainty in markets over the past year. Superannuation fund returns are expected to be slightly negative over the month, with leading superannuation research house SuperRatings estimating the median balanced option generated a return of -0.2% for May. Despite the uncertain outlook for inflation, we estimate financial year to date returns on a Balanced (60-76) option to be 7.9% as at the end of May. Depending on returns throughout June, super funds are on track to manage a return above inflation for the past 12 months.

The median growth option fell by an estimated -0.3% over May, while the median capital stable option is estimated to decline by -0.2%.

Accumulation returns to May 2023

	Monthly	FYTD	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.2%	7.9%	4.0%	7.4%	5.9%	6.6%	7.3%
SR50 Capital Stable (20-40) Index	-0.2%	4.4%	2.6%	3.2%	3.2%	3.7%	4.5%
SR50 Growth (77-90) Index	-0.3%	9.6%	5.0%	9.1%	6.8%	7.7%	8.5%

Source: SuperRatings estimates

Pension returns saw a similar fall over May with the median balanced pension option estimated to decline by -0.3%. The median growth pension option is also estimated to fall by -0.3%, while the median capital stable pension option fell by an estimated ‑0.2% over the month.

Pension returns to May 2023

	Monthly	FYTD	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.3%	8.6%	4.7%	8.0%	6.4%	7.5%	8.0%
SR50 Capital Stable (20-40) Index	-0.2%	4.9%	3.2%	3.7%	3.5%	4.1%	4.9%
SR50 Growth (77-90) Index	-0.3%	10.6%	5.5%	9.7%	7.6%	8.6%	9.2%

Source: SuperRatings estimates

Executive Director of SuperRatings Kirby Rappell commented, “While May saw a small fall, funds are currently on track to deliver a return in excess of inflation, so funds have kept the value of members money from diminishing in a high inflation environment, which has been no simple task.”

In dollar terms, members with $100,000 invested in the Balanced option at the start of July last year would have an estimated $107,833 in their account at the end of May, not accounting for administration fees or any insurance premiums they may pay. Members investing in the more defensive Capital Stable option would have an estimated $104,677 with smaller ups and downs throughout the year, while members that limited their investments to Cash would have a lower overall balance of $102,358 while seeing small gains each month. This demonstrates that fund’s investment strategies are behaving as expected by trading off between account growth and a smooth return, even in such uncertain times.

“Inflation, and the central bank response to inflation, have been the most influential factors for superannuation performance this financial year and we expect this to continue into FY24. Super fund returns have had a bumpy year with markets facing several shocks over the last 11 months; however, funds continue to navigate the challenges well with most accounts seeing growth over the course of the full year”, Mr Rappell continued.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

June 9, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, Media releases

Media release: Super performance stays strong in April

Markets continued their upward trajectory in April with leading superannuation research house SuperRatings estimating the median balanced option generated a return of 1.2% for the month, driven by continued momentum in Australian and global equities. However, inflation continues to sit well above central bank targets and the Reserve Bank of Australia defied expectations by increasing rates by another 25 basis points in their May meeting, again highlighting the ongoing challenge posed by inflation.

As we head towards the end of the financial year, funds look to be on track to deliver strong absolute returns with an estimated 8.1% return for a Balanced (60-76) option over the financial year to date.

The median growth option rose by an estimated 1.4% over April, while the median capital stable option rose by an estimated 0.7%.

Accumulation returns to April 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	1.2%	3.2%	8.3%	6.0%	7.0%	7.4%
SR50 Capital Stable (20-40) Index	0.7%	2.2%	3.7%	3.3%	4.0%	4.5%
SR50 Growth (77-90) Index	1.4%	3.6%	9.9%	7.0%	8.1%	8.6%

Source: SuperRatings estimates

Pension returns also improved over April with the median balanced pension option rising an estimated 1.3%. Similarly, the median growth pension option is estimated to rise by 1.6%, while the median capital stable pension option gained an estimated 0.7% over the month.

Pension returns to April 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	1.3%	3.4%	9.1%	6.5%	7.7%	8.0%
SR50 Capital Stable (20-40) Index	0.7%	2.3%	4.2%	3.6%	4.4%	4.9%
SR50 Growth (77-90) Index	1.6%	4.4%	11.0%	7.8%	9.0%	9.3%

Source: SuperRatings estimates

“The strong financial year to date return will be welcome news for members after last year’s losses as well as some bumpy months at the start of this financial year. However, these returns and latest inflation figures demonstrate the challenge facing super funds, the economy and everyday Australians. Inflation for the year to March sat at 7%. Most funds over the longer term are targeting a return of inflation plus 3% per annum for their members invested in the balanced option. Put simply, super funds are on track to return around 8% thus far this financial year, despite this also being behind an objective of inflation plus 3%. What it reinforces is that super remains a long term game and that returns are holding up pretty well, despite the challenges that funds and their members are facing to adapt to a higher inflation environment.”, commented Executive Director of SuperRatings, Kirby Rappell.

“We expect to see continuing volatility in returns, despite the strength with which volatility has been navigated to date. Setting long term strategy remains the best approach to long term success. While fund performance may struggle to significantly outpace inflation in the current environment, over the long term they continue to perform well.”

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

May 9, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, Media releases

Media release: Markets close out March quarter on a positive

While inflation indicators continue to be closely watched, markets recorded a positive return in March following the slight fall in February, closing the first three months of 2023 on a positive note. Leading superannuation research house SuperRatings estimates that the median balanced option generated a return of 0.9% for March and 3.4% for the first three months of the year.

While the Reserve Bank paused their increases to the cash rate in April after 10 consecutive rises, significant uncertainty remains over the direction of the federal funds rate. While markets may anticipate a pause; there has been no pause in volatility as half of the previous 8 months returns were negative, with further volatility remaining the outlook for the remainder of the financial year.

The median growth option also rose by an estimated 0.9% over March, while the median capital stable option rose by an estimated 1.0% for the month.

Accumulation returns to March 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	0.9%	0.6%	8.9%	6.1%	6.9%	7.4%
SR50 Capital Stable (20-40) Index	1.0%	0.9%	3.9%	3.3%	3.9%	4.5%
SR50 Growth (77-90) Index	0.9%	0.6%	10.9%	7.2%	8.0%	8.7%

Source: SuperRatings estimates

Pension accounts provided slightly better returns over the period, with the median balanced pension option rising an estimated 1.1%. The median capital stable pension option is also estimated to have gained 1.2% over the month while the median growth pension option is estimated to rise by a slightly smaller 0.9% for the same period.

Pension returns to March 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	1.1%	0.4%	9.9%	6.6%	7.7%	8.1%
SR50 Capital Stable (20-40) Index	1.2%	1.0%	4.5%	3.7%	4.4%	4.9%
SR50 Growth (77-90) Index	0.9%	0.2%	11.8%	7.9%	8.9%	9.4%

Source: SuperRatings estimates

“Super funds continue to demonstrate their ability to capture upside benefits for members when they are available in the market while managing for market volatility through diversification. As we edge closer to the end of the financial year the outlook feels slightly more stable, although there is still a chance that annual returns could drop back into negative territory depending on the final quarter of the financial year”, commented Executive Director of SuperRatings, Kirby Rappell.

“While there has been significant ups and downs over each month in the year so far, the estimated financial year to 31 March return sits at 6.6%. Superannuation remains a long term investment for most and these shifts also have a much smaller impact when considering 10 year performance. Funds are well equipped to navigate changing markets, with 10 year performance estimated to be 7.4% and demonstrating resilience to date” Mr Rappell added.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

April 13, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, News & Insights, Video

SuperRatings Quarterly Insights – April 2023

It has been a busy start to 2023 for the industry, with regulatory change ongoing and the need to have the right frameworks to assess member outcomes over time more important than ever.

In this edition, we provide an update on SuperRatings’ annual review and research themes for the industry.

What are the pressures facing funds and who is harnessing their scale?

In meeting with funds across the industry, we saw a number of key themes emanating from our reviews. This video outlines some key findings including:

Despite significant investment, funds are still struggling to define their value proposition.
The correlation between net asset growth and operating expense growth is broken.
Competition is heating up between funds, with a strong focus needed on how well funds are harnessing their scale.

Funds of all shapes and sizes face challenges and opportunities. In the current landscape, tracking and managing them is more crucial than ever.

Kirby Rappell, Executive Director, SuperRatings

April 11, 2023/by Kirby Rappell

Lonsec Retirement Perspectives, Media releases

Markets remain cool while inflation remains warm in February

As markets focus on the persistence of inflation, returns were subdued over the month with leading superannuation research house SuperRatings estimating that the median balanced option generated a return of -0.4% for February.

With the peak in the federal funds rate still uncertain, we expect markets to remain volatile and members should expect further ups and downs in their balances over the coming months. Despite this volatility, we have still seen a modest positive return over the past year.

The median growth option and the median capital stable option also fell by an estimated -0.4% in February, as funds continue to navigate high levels of uncertainty across markets.

Accumulation returns to February 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.4%	0.8%	5.1%	5.8%	7.1%	7.3%
SR50 Capital Stable (20-40) Index	-0.4%	-0.2%	1.9%	3.1%	3.9%	4.4%
SR50 Growth (77-90) Index	-0.4%	1.4%	6.4%	6.7%	8.2%	8.5%

Source: SuperRatings estimates

Pension returns faced a similar moderate fall over February, with the median balanced pension option down an estimated -0.5%. The median capital stable pension option is also estimated to have fallen by -0.5% over the month while the median growth pension option is estimated to fall by a slightly smaller -0.4% for the same period.

Pension returns to February 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.5%	0.6%	5.8%	6.2%	7.9%	8.0%
SR50 Capital Stable (20-40) Index	-0.5%	0.0%	2.1%	3.4%	4.3%	4.8%
SR50 Growth (77-90) Index	-0.4%	1.2%	6.9%	7.4%	9.2%	9.3%

Source: SuperRatings estimates

“While super funds are estimated to have had negative returns over February, super fund returns remain much less volatile than equity markets. This demonstrates the benefits of diversification and the ability of funds to weather these markets conditions with competitive outcomes for their members.”, commented Executive Director of SuperRatings, Kirby Rappell.

While the response to inflation has been swift, there is a silver lining for those members close to retirement who may have greater reliance on cash returns. Rising interest rates are now flowing back through to member’s cash returns with the SR50 Cash index return rising since May 2022 in line with the RBA cash rate. The chart below displays the monthly and rolling one year return for cash since May 2022.

Cash returns for the month of May 2022 were less than 0.1%, with members seeing an annual return on cash of just 0.2% for the 2022 financial year. This was less than the cash return for January 2023 meaning members would have earned more on their superannuation invested in cash over the month of January than they did for the entire year to June 2022. If we see the current level of cash returns remain, we expect to see outcomes rising quickly towards 4-5%.

“For those members seeking more stability or cash flow to support pension withdrawals, rising cash returns will be a welcome trend; however, cash returns remain materially below the current level of inflation and are unlikely to be of benefit for younger members. We recommend members seek advice from their fund or a trusted adviser before making changes to their investment strategy.” Mr Rappell added.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

March 10, 2023/by Joshua Lowen

Lonsec Retirement Perspectives, Media releases

Media Release: Market rally gives super funds a positive start to 2023

Leading superannuation research house SuperRatings estimates that the median balanced option generated a return of 3.0% in January, which will be welcome news for members following a disappointing 2022 calendar year.

The continued upward trajectory in interest rates remains a key challenge for the return outlook, with increasing rates either signalling economic resilience or inflationary threats expanding. The positive return pushed estimated financial year to date returns to 6.0% with five months left in the year, which demonstrates the resilience of super during the market volatility that has been experienced.

The median growth option increased by an estimated 3.4% in January, while the median capital stable option delivered a 1.8% return to members.

Accumulation returns to January 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	3.0%	0.0%	4.3%	5.8%	7.1%	7.6%
SR50 Capital Stable (20-40) Index	1.8%	-0.4%	1.8%	3.2%	4.0%	4.6%
SR50 Growth (77-90) Index	3.4%	0.6%	5.1%	6.7%	8.2%	8.8%

Source: SuperRatings estimates

Pension returns also rose over January, with the median balanced pension option up an estimated 3.5%. While an increase of 3.9% was estimated for the median growth option and a more modest 2.0% for the median capital stable pension option.

Pension returns to January 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	3.5%	0.2%	4.7%	6.3%	7.9%	8.3%
SR50 Capital Stable (20-40) Index	2.0%	-0.4%	2.1%	3.5%	4.4%	4.9%
SR50 Growth (77-90) Index	3.9%	-0.5%	5.5%	7.5%	9.1%	9.6%

Source: SuperRatings estimates

“Funds have had a positive start to 2023 and it again underlines the way in which funds have navigated an uncertain market well overall. However, inflation remains high and the Reserve Bank’s commitment to controlling inflation means member balances are likely to see more ups and downs over the coming months.”, commented Executive Director of SuperRatings, Kirby Rappell.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

February 9, 2023/by Joshua Lowen