How is your super performing in 2020?
The superannuation numbers are in and things aren’t as worrisome as some savers may have anticipated given the economic impacts of Covid-19.
Industry research group SuperRatings assesses balanced super options from the major 50 funds in Australia through their SR50 Balanced Index. Across the last 12 months, Suncorp has been performing the strongest within this group with returns of 3.8%. This was followed by balanced options from BUSSQ (2.5%) and Australian Ethical Super (2.4%).
While the estimated median return sits at -1.2%, SuperRatings said the top 15 assessed options saw slim but positive returns.
However, these ratings don’t take into account smaller funds which haven’t been operating for more substantial periods and thus can’t report long-term returns (which is a key part of the ratings metric). When newer players were considered, Future Super took out the top spot with its Balanced Index delivering 5.52% growth in the last financial year.
The social equality and sustainability-focused fund also took home silver and bronze, with its Renewables Plus Growth and Balanced Impact options garnering returns of 5.26% and 5.21% respectively.
Co-founder of Future Super, Kirstin Hunter said this data shows Aussies they don’t have to sacrifice financial gain to maintain their ethical standards.
“At Future Super we’ve long understood that investment in unethical businesses doesn’t just have a detrimental impact on the environment and society, but also represents a bad investment choice that will damage how comfortably Australians can retire,” she said.
SuperRatings executive director, Kirby Rappell, also reminded super members this kind of investment is a long-term game.
“Members should avoid chasing short-term results and ensure they are invested in a quality fund with the right investment strategy that is well positioned to deliver for their needs over the course of their working life,” Rappell said.
In SuperRatings’ ten-year assessment, the top performers have been AustralianSuper, whose balanced option has returned 8.8% p.a. across the last decade, followed closely by UniSuper and Hostplus.
RELATED: How to build an emergency savings stash and leave your super intact.
Early access to super extended until December
It’s a particularly relevant time to be ruminating on the long-term purpose of superannuation, as early release super payments have now tipped over the $28 billion mark.
When it was introduced in March, the scheme allowed financially impacted Australians to withdraw up to $10,000 of their super before the financial year was out. They could then apply for the same amount after June 30, until September. Last week this timeline was extended to the end of 2020.
While the aim of the scheme is to provide short-term support for those facing financial hardship due to Covid-19, its merits have been continuously debated. The argument centres around the idea that super is intended to be drawn on during retirement, and taking out funds early means the benefit of it will be diminished over time.
What could Covid-19 cost Aussies in super?
About $3 trillion dollars, according to finance research group Rainmaker Information. The group’s recent analysis anticipates this amount of foregone growth by 2040.
The report considered Australians withdrawing their superannuation early, but also factored in rising unemployment, which goes hand-in-hand with reduced super contributions. Lower forecasted long-run super earnings, reduced population growth and other recession conditions were also part of the projection.
Alex Dunnin, the executive director of research and compliance at Rainmaker Information, said while super will remain a central retirement savings pool and boost the nation’s economy, the current circumstances must be managed carefully.
"Super funds are major investors into Australia's economy with their investments spanning infrastructure, property, purchase of government bonds, company shares, agribusiness, seeding start-ups and energy projects,” Dunnin said.
“Three trillion dollars less in available capital could have major ramifications."
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