Super funds returns far outpacing growth in weekly earnings and CPI

Super fund returns are outpacing growth in weekly earnings and inflation, over the short and long term.

Analysis released by the Association of Superannuation Funds of Australia (ASFA) finds that the median accumulation phase super fund returned (after tax and investment fees) 10.0% per annum over the full 56 years covered by the study. This exceeds CPI over the same period by 3.2% p.a. and Average Weekly Earnings (AWE) by 4.9% p.a.

Super fund returns v Average Weekly Earnings (AWE) and CPI

Though little detail is given about the methodology of the analysis, which was was conducted by Morningstar.

“While most superannuation fund members bear the risk of variations in investment returns from year to year (including negative returns in some years) the concept of taking on short term risk in order to gain a healthy long term return is well established,” said ASFA.

“Superannuation has provided long-term inflation adjusted returns that more than compensate for the risks involved.”

ASFA CEO Dr Martin Fahy said that super funds were amassing wealth for their members.

“For the typical fund member in a balanced option, investment returns have added more than 85 per cent of the original balance over the past 10 years, while members in growth options have seen their savings grow by more than 90 per cent, even without further contributions,” he said.

“This is despite the significant impact on members experienced during the Global Financial Crisis.”

“Superannuation is working,” said Dr Fahy.

“An increasing number of retirees now have significant private income above the Age Pension, meaning they achieve a comfortable standard of living in retirement, rather than just getting by,” he said.

“With legislated increases in the Superannuation Guarantee (SG), this trend will continue and by 2050, half of all retirees will reach the ASFA comfortable standard.”

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