Money Your Super Superannuation funds return 6 per cent in the March quarter as financial year turns positive
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Superannuation funds return 6 per cent in the March quarter as financial year turns positive

Super returns
Super funds shot back into positive territory in the March quarter. Photo: Getty
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Super members have shaken off the effects of the share market slump late last year and returned to positive territory in the March quarter.

The median-growth fund, where most Australians are invested, rose 6 per cent over the period, according to research house Chant West – with returns for the first nine months of the financial year sitting on a positive 3.3 per cent.

The median-growth option, sometimes referred to as balanced, has between 61 per cent and 80 per cent in growth assets.

“The 6 per cent rise for growth funds over the March quarter more than offset the 4.6 per cent loss over the December 2018 quarter,” Chant West researcher Mano Mohankumar said.

“With the financial year return sitting at 3.3 per cent and share markets up in April so far, super funds are back on track for a 10th consecutive positive financial year result.”

Shares drove returns

Strong share markets drove the super rebound. Australian shares were up 10.9 per cent over the quarter and international shares were even stronger with a return of 12.7 per cent in hedged terms.

Property also performed well with Australian and international REITs (real estate investment trusts) advancing 14.4 per cent and 14.5 per cent respectively.

“The share market rebound was driven partly by optimism that there may be a successful resolution to the US-China trade dispute,” Mr Mohankumar said.

Results from the lifestyle products, which reduce portfolio risks as members age, were similar to the standard-growth product.

Chant West found that lifestyle products typically used by for-profit retail funds had recorded average growth rates of between 3.7 per cent and 3.1 per cent since July 1, 2018.

Fund trustees warned on breaking law

Meanwhile, consumer advocacy group Choice warned super fund trustees they could be breaking the law if they continue charging members duplicate administration fees and insurance after new laws banning the practices take effect from July 1.

“Super funds are potentially breaking the law to keep hitting people with duplicate zombie fees and insurance. This is a disgraceful act of self-interest,” said Xavier O’Halloran, head of Choice’s new Superannuation Consumers Centre.

“The ‘Protecting Your Super Package’ legislation was introduced to protect people’s retirement savings from erosion due to ‘zombie’ fees and insurance.

“For some funds to try and keep the fee gouge running by misleading people into acting against their own interests is not only galling, but it’s against the law.

“If people want free and independent information about their insurance needs and the value of consolidating multiple accounts they can go to ASIC’s MoneySmart website or at CHOICE.com.au,” Mr O’Halloran said. 

Under the new laws the following changes will be introduced:

  • Insurance will be opt-in for members whose accounts have been inactive for 16 months
  • Fund members with balances under $6000 whose accounts have been inactive for 16 months will have their accounts paid to the Australian Tax Office (ATO). The ATO will take proactive steps to consolidate this with the members’ active super fund
  • Fee caps will be imposed on certain fees for account balances under $6000
  • Exit fees will not be charged for moving money from a superannuation account.

 “The … changes will encourage the consolidation of multiple low-balance superannuation accounts and help ensure members have insurance arrangements that are suitable for them without unnecessarily eroding their super balance,” said Danielle Press, a commissioner with the Australian Securities and Investments Commission.

The New Daily is owned by Industry Super Holdings

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