Millions of Australians are reaping significant financial benefits from an unexpected performance surge in their superannuation funds. Thanks to robust global share markets and favorable conditions, the average superannuation member could see thousands of dollars added to their retirement savings in 2024.
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Unveiling the “Tremendous Outcome”
Superannuation consultant Chant West has reported that the median growth fund—typically composed of 61 to 80 percent growth assets—has achieved a remarkable 10.3 percent return in the calendar year to date. This performance has outpaced the long-term objective of 6 percent annual growth and follows an already strong 9.9 percent return in 2023.
Who Benefits Most?
While individual outcomes vary depending on investment strategy and balances, Chant West estimates substantial gains for the average superannuation member:
- Men aged 44–49: Up by $24,432 compared to this time last year, without any additional contributions.
- Women aged 44–49: Up by $16,284 under similar circumstances.
What Drove the Strong Performance?
The stellar returns are largely attributed to global market trends:
- Robust Share Markets: Strong gains across international equities have significantly boosted fund performance.
- Currency Advantage: A weaker Australian dollar (falling from US69c to US65c) turned into a 3.9 percent gain for unhedged international assets, offsetting declines in domestic shares and bonds.
- Post-Election Rally: Dubbed the “Trump Trade,” share markets rallied after the U.S. election, further driving returns in November.
While October saw a dip due to stronger-than-expected U.S. economic data and interest rate adjustments, super funds managed to hold steady with a flat return that month.
A Long-Term Proposition
Mano Mohankumar, Chant West’s senior investment research manager, emphasized the importance of viewing superannuation as a long-term strategy.
“Since the introduction of compulsory super in 1992, the median growth fund has returned 8 percent per annum, while CPI increased by 2.7 percent annually. This translates to a real return of 5.3 percent per year—well above the typical target of 3.5 percent,” Mr. Mohankumar said.
Even in the past 20 years, which included major downturns like the Global Financial Crisis (2007–2009), the COVID-19 pandemic (2020), and high inflation with rising interest rates (2022), super funds have delivered a healthy average annual return of 7.2 percent.
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What’s Next for Super Funds?
With the global economy still facing uncertainties, super fund members should remain optimistic but cautious. The U.S. Federal Reserve recently eased interest rates to 4.5–4.75 percent but indicated it may slow future rate cuts.
Despite this, super funds are on track to close 2024 with impressive results, provided global markets maintain their momentum.
Key Takeaways for Super Fund Members
- Review Your Investment Strategy: High-growth portfolios have fared particularly well in the recent market surge.
- Understand the Long-Term Benefits: Superannuation remains a reliable vehicle for building wealth over decades.
- Monitor Market Trends: While returns have been strong, staying informed about market movements and economic policies can help you make better decisions about your retirement savings.
Building a Secure Retirement
The surprising performance of super funds in 2024 highlights the resilience and growth potential of Australia’s superannuation system. With median growth funds delivering above-average returns, millions of Australians can look forward to a brighter financial future—whether or not they’ve noticed the gains yet.
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