A Finder survey has revealed that 49% of Australians – the equivalent of 10.2 million people – have no idea how their superannuation fund is performing. A further 41% say they only have a rough idea.
This is despite superannuation arguably being the most important savings vehicle for every working Australian, with a direct bearing on whether we will have a modest or comfortable retirement.
According to the Association of Superannuation Funds of Australia (ASFA), workers need $100,000 in superannuation by age 67 to fund a modest retirement lifestyle.
A comfortable lifestyle requires more super savings: $595,000 for singles and $690,000 for couples.
Finder's personal finance expert, Sarah Megginson, said Australians need to take a stronger interest in their superannuation savings.
Megginson said:
The more engaged you are with your retirement savings, the better results you will generally achieve.
Choosing a high-performing super fund over a low-performing fund can make a huge difference to your retirement savings.
Vanguard's Chief Investment Officer Duncan Burns said a super fund's investment performance and the fees it charges are the two factors that will "materially impact your superannuation balance at retirement".
These are the two most important elements to consider when researching super funds.
How did superannuation funds perform in FY24?
Chant West senior investment research manager Mano Mohankumar said Australian superannuation funds delivered "excellent" returns in FY24 despite high inflation and interest rates worldwide.
Chant West reported the median returns for all five of the different types of superannuation funds.
Balanced funds
This is the default type of superannuation fund that employers pay into for workers who do not choose a fund type themselves. Balanced funds have 41% to 60% in growth assets. The rest is invested in defensive assets like cash and bonds. These funds delivered a median return of 7.4% in FY24.
Conservative funds
Conservative funds only have a 21% to 40% allocation to growth assets. They are popular with pre-retirees who prefer lower-risk strategies in their final years of work to preserve their lifetime of savings. Conservative superannuation funds returned a median of 5.5% in FY24.
Growth funds
Growth superannuation funds have a 61% to 80% allocation to growth assets like international stocks and ASX shares. They delivered a median return of 9.1% in FY24.
High growth funds
High-growth and all-growth superannuation funds are suitable for younger investors. This is because they have a longer time horizon and may, therefore, like to take higher risks for higher returns. High growth funds have an 81% to 95% allocation to growth assets. They delivered a median 10.8% return in FY24.
All growth funds
All growth funds allocate 96% to 100% of superannuation monies to growth assets. These funds delivered the best gains in FY24 with a median return of 12.7%.
