Aussie workers have benefited from supperannuation funds having their best year since 2021 and their eighth best since the turn of the century, new research shows.
The median balance option, which is more aggressively invested into assets including shares, has had a bumper year for members, with both domestic and international markets returning double digit growth.
Analysis by SuperRatings shows that the median balanced option returned 11.5 per cent for 2024, and most options delivered a return of more than 10 per cent.
Top providing funds are likely to achieve returns of 12.5 per cent.
Aussie workers are all wealthier due to the strong performance of superannuation funds in 2024. Picture: NewsWire / Nicholas Eagar
A balanced option will have between 60 to 76 per cent of money invested in growth assets including Australian shares, international shares, property, alternatives, fixed interest and cash.
SuperRatings executive director Kirby Rappell said 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.
“Returns were modest leading into Christmas, with leading research house SuperRatings estimating that the median balanced option (60-76 per cent growth assets) generated a return of 0.4 per cent over the month. However, positive returns over 11 of the 12 months in the year have added up,” Mr Rappell said.
It is the strongest result since 13.4 per cent in 2021 when equities rebounded from sluggish performance during the pandemic years.
The best return in the past 10 years was 14.7 per cent in 2019, while members received a 16.3 per cent bounce in 2013, which is the best result since 2000.
Overall, long term returns remain strong with an estimated median return of 6.7 per cent per annum since 2000, and back above the target objective CPI+3 per cent return.
According to the latest ABS read, the CPI came in at 2.8 per cent annually in the September quarter, with the December quarter figures released in late January.
Mr Rappell said despite a strong 2024, there are some risks to navigate into the new year as markets stabilise.
“Most of this year’s returns have come from share markets, which are now priced at historical highs both in Australia and internationally,” Mr Rappell said.
Despite a strong 2024, there will be some risks for account holders to navigate in the New Year. Picture: NCA NewsWire / Nicholas Eagar
The ASX 200 grew 6.97 per cent in 2024, with dividends added likely to see returns near 11 per cent, while the US S & P 500 grew an impressive 24.01 per cent for the calendar year.
Mr Rapell said while risks remain, the focus from members should be on the long-term performance of Australian funds.
“A correction in share markets would have a strong flow on effect to members’ superannuation balances and members should be prepared to see ups and downs over the short term.”
“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,” Mr Rapell said.
“Funds have consistently demonstrated their ability to swiftly recover from downturns and members with many years until retirement can afford to block out short term noise in returns.”
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