Australia’s 2.7 trillion dollar superannuation system has chalked up its 10th year of positive returns in 2018-19, easily outpacing its own returns target.

The median growth fund finished the latest financial year 7 per cent up, with profit-to-member funds UniSuper and QSuper topping the leader boards with an impressive 9.9 per cent return in their growth options.

The two funds’ balanced options offered similar returns, with UniSuper clocking in at 9.9 per cent and QSuper narrowly behind at 9.7 per cent for the year.

That performance has capped off a decade in which the super system has added $1.3 trillion to members’ accounts, based on modelling by SuperRatings.

Chant West senior investment manager Mano Mohankumar added that the average super fund return over the past decade has been 8.8 per cent a year.

“Fund members should be very pleased with the 2018/19 return of 7 per cent. It’s better than what most experts predicted a year ago, and it’s about 5.5 per cent above the current rate of inflation – well above the typical long-term objective which is to beat inflation by 3.5 per cent,” Mr Mohankumar said.

“That’s a tremendous run, but we should remember that it partly represents the recovery from the GFC, which produced two consecutive financial year losses in 2007-08 and 2008-09. So it would be a mistake to assume that the level of returns we’ve seen recently is sustainable.”

SuperRatings executive director Kirby Rappell was similarly cautious about the industry’s ability to sustain that level of performance.

“Members should enjoy the strength of returns we’ve seen over the past decade, but as more and more workers enter and exit the system, it’s important that we keep talking about how funds manage market pullbacks and other risks for their members,” he said.

“The uncertainty that many consumers and investors feel at the moment reminds us that super is a long-term game, and members must have an understanding of both risk and return, and the effect they have on their retirement savings.”

Mr Rappell warned that super funds could become victims of their own success, noting that higher balances will feel the effects of fluctuating markets more severely than smaller accounts.

The 4.7 per cent drop that slammed the super system in the December  2018 quarter represents a useful example of this, Mr Rappell said, as members with a balance of $100,000 were more greatly affected than those with balances of only $10,000.

The New Daily is owned by Industry Super Holdings