Despite challenging economic and geopolitical conditions, superannuation pension funds posted stellar back-to-back returns for the financial year to June 2024, with the median Growth fund (61–80% growth assets) up 10.0%. This follows the 10.1% return the previous financial year.
Once again, shares were the main driver of the healthy 2024 result, with international shares surging 21.5% over the year on booming artificial intelligence (AI) stocks. While slightly more subdued, Australian shares rose a solid 11.9% on the back of a strong bank sector.
This was reflected in the outperformance of higher risk categories with a higher allocation of shares. While all risk categories were strongly positive over the year, returns ranged from 14.2% for the median All Growth option to 6.2% for the median Conservative option.
Chant West senior investment research manager Mano Mohankumar said: “The return experience of the past two years in the face of much uncertainty is another reminder of the importance of remaining patient and maintaining long-term focus. If you think back two years ago, (financial year) 2023 kicked off amid surging inflation and uncertainty around when interest rate hikes might come to an end. I don’t think anyone could have forecast a 20.1% return over the subsequent two years and the small 2022 loss now seems like a distant memory.”
Last year’s positive returns mean most retirees would have seen their account balance increase even after withdrawing the mandated minimum pension income. The government’s move to temporarily halve the minimum withdrawal would have helped protect account balances in rocky patches in recent years, although standard minimum withdrawal rates were reinstated for the 2023–24 financial year onwards.
Pension fund categories – Conservative, Balanced, Growth, High Growth and All Growth – are the same as those for accumulation funds and by and large hold the same underlying investments. So, pension fund returns are driven by the same factors as accumulation fund returns.
