Super Funds produce worst 5 year returns ever

Recently reported that Australian superannuation funds have reported the worst five-year returns since the introduction of compulsory super contributions in 1992.

Superannuation fund analyst Superratings figures show that annual returns for the median “balanced” super fund sector, which accounts for about 80 per cent of Australia’s $1.3 trillion super industry, averaged just 0.92 per cent a year for each of the past five years.

Once inflation is taken into account, the purchasing power of those savings has fallen by 2 per cent a year.

“It’s the worst five-year stretch we’ve ever seen and if things don’t improve then returns over seven and 10 years will be hit too,” Superratings chief executive Jeff Bresnahan said.

“The real test of an investment is can it produce a ‘real’ return, after inflation.

“For the past five years the average super fund has failed to do this, but over the longer term it is doing much better. You can’t take the period covering the GFC in isolation.”

Mr Bresnahan said the average return on a balanced super fund since compulsory super was introduced in 1992 was 6 per cent.

“The target for super funds is to produce returns equivalent to inflation plus about 3 per cent a year,” he said.

“Since its inception, that is what it has achieved. But if global markets don’t rally soon then clearly it will hit our retirement funds and longer-term performance will be dragged down too.”

My thoughts:

Superannuation is a tax effective form of saving and, considering the pension won’t go far in retirement, we all need to maximize our superannuation.

Unfortunately leaving your super in the hands of financial planners just hasn’t been working – not just in the last 5 years as reported by this article, but in the long term. Is 6% really the type of return you are prepared to accept?

I am finding more and more of our clients at Metropole  are taking their future in their own hands and setting up a Self Managed Super Fund, giving them the ability to borrow and buy a property in their super fund.

This requires specialized advice from a proficient financial planner or accountant, but it’s something I’ve been doing in super for a while and I’m setting myself up to buy another property in super very soon.

I’m not prepared to accept a 6% return – are you?


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit

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