Australians look set to receive a Christmas present unimaginable a few months ago, with superannuation returns moving into positive territory and likely to hit 3 per cent for 2020.

The positive return was driven by a sharemarket surge in November that saw the median growth (or balanced) fund – which has between 61 per cent and 80 per cent in growth assets – jump a remarkable 4.9 per cent in November, according to research house Chant West.

That drove the cumulative return for the first eleven months of the year to 2.6 per cent.

Chant West researcher Mano Mohankumar said markets are up slightly in December so far and “we estimate that, with two weeks to go, the calendar year return is now sitting at about 3 per cent”.

That translates to an annual increase of $5055 in superannuation savings for men with average-sized balances and of $3639 for women.

(The Association of Superannuation Funds of Australia says men over the age of 15 have an average balance of $168,500 while women over the age of 15 have $121,300).

Back to black

“A final result in the black, even a small one, would represent an excellent outcome for fund members given the disruption and economic damage caused by COVID-19,” Mr Mohankumar said.

“Let’s not forget that only a year ago members were enjoying one of the strongest years in the past 20, with growth funds returning 14.7 per cent for calendar 2019.”

SuperRatings, another industry researcher, also found the median growth option had returned 4.9 per cent in November.

“We’ve had a watershed month for super and hopefully this strong performance can continue through to the new year,” said SuperRatings executive director Kirby Rappell.

“Given the world is battling a pandemic that has resulted in large sections of the economy being placed in lockdown, the results are remarkable. This is the year super proved its worth once again and reminded us why it is so critical to our economic success.”

SuperRatings breaks performance down into funds in accumulation mode and those in pension mode. Pension funds are slightly less exposed to growth assets because of their need to provide stable income for retirees.

But even the pension funds have recovered remarkably, with the median growth or balanced option returning 5.4 per cent in November, 2.6 per cent for the calendar year, and 2.4 per cent for the past 12 months.

“The global recovery is under way and is looking sufficiently V-shaped, but recent economic news has been mixed,” Mr Rappell said.

“Infection rates have risen in the US and Europe, causing a loss of momentum, but news of successful vaccine trials have boosted confidence.

“Australia’s success in containing the coronavirus has put us in an enviable position, but there are still significant risks at play.

“The pandemic is not yet defeated and there are geopolitical issues weighing on the outlook.

“Members should be optimistic but prepare themselves for potential surprises as we head into 2021.”

As the chart above shows, compulsory super has consistently beaten expectations since it was introduced in 1992.

Since then, the median growth fund has returned 8.1 per cent annually, or 5.7 per cent after inflation.

The targeted return over that period was only 3.5 per cent after inflation, Chant West said in a statement.

The New Daily is owned by Industry Super Holdings