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Average super fund beats the Future Fund: ASFA

Australian super funds are staying competitive with world-class investment returns, with the Association of Superannuation Funds of Australia (ASFA) reporting that over the last 56 years, super funds have returned on average 10 per cent per annum.

These returns, prepared for ASFA by Morningstar, showed that superannuation returns over that period exceeded average weekly ordinary time earnings/average weekly earnings (AWOTE/AWE) and price (CPI) by 3.2 and 4.9 per cent per annum, respectively.

The same data showed strong returns from super funds for the past year, delivering 9.1 per cent after tax and fees for the year ending 30 June, 2018.

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This meant that the average super fund outperformed the Future Fund for the last financial year. While the Future Fund reported returns of 9.3 per cent over that period, when allowance was made for the tax paid by super funds on investment income that figure fell to 8.8 per cent.

ASFA said these results showed that the ability of superannuation to provide long-term returns “more than compensates” for the risks involved in investing.

“Superannuation is working,” ASFA chief executive, Dr Martin Fahy, said.

“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.

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

Average superannuation fund returns over both the short-term and long-term

 

Average fund returns (%)

AWE
(%)

CPI
(%)

Real returns (%)

vs AWOTE

vs CPI

1 Year

 9.1

 2.4

 2.1

 6.5

6.8

5 Years

 9.0

 2.1

1.9 

 6.8

7.0

10 Years

 6.5

 3.5

 2.1

 2.9

4.3

15 Years

 7.5

 3.7

 2.4

 3.7

5.0

20 Years

 6.7

 4.0

 2.6

 2.6

4.0

25 Years

 7.6

 4.0

 2.5

 3.5

5.0

30 Years

 8.0

 4.2

 2.8

 3.6

5.1

35 Years

 9.6

 4.6

 3.4

 4.8

6.0

40 Years

 10.6

 5.4

 4.2

 4.9

6.1

45 Years

 10.2

 6.5

 5.2

 3.5

4.8

50 Years

9.7

 6.7

 5.1

 2.8

4.4

56 Years

10.0

 6.6

 4.9

 3.2

4.9

Source: ASFA




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