Australia’s $4.1 trillion superannuation industry has produced its best returns in three years due to strong international share markets but faces potential headwinds in 2025.
Peak body Australian Superannuation Funds Association (ASFA) and super research firm Super Ratings said they estimated super (pension) funds had achieved double digit returns in 2024.
Super Ratings said the median balanced option was expected to have returned 11.5% with the vast majority of options above 10% and leading retirement savings providers returning more than 12.5%.
The highest since 13.1%, this return compared with a balanced return of 11.5% in 2023, and an average return of 6.7% since 2000.
“It has been a year of surprisingly strong and consistent positive returns for the industry where superannuation funds have strongly benefited from international share exposure leading to double digit returns,” Super Ratings Executive Director Kirby Rappell said.
ASFA CEO Mary Delahunty said some high-growth investment options, which use higher-risk strategies, were reporting annual returns as high as 15%.
“While strong international share markets have helped propel returns over the last 12 months, it’s the consistent, sophisticated portfolio construction from superannuation funds’ expert investment teams that deliver terrific long-term results regardless of what is happening on the markets,” Delahunty said in a statement.
Rappell said plenty of risks remain to be navigated in 2025 with share markets priced at historical highs in Australia and internationally.
“A correction in share markets would have a strong flow on effect to member’s superannuation balances and members should be prepared to see ups and downs over the short term,” he said.
“Inflation, particularly in Australia, also continues to be persistent with Australian interest rates likely to come down slowly over time, and cost of living pressures remain elevated.”
*Note: all figures are estimates using latest unit price available as at 10am 31 December and subject to final returns being declared by all funds in late January 2024.