Pension fund performance to June 2025

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.

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Pension funds outperform accumulation funds

Despite holding the same underlying investments, pension fund returns tend to be roughly 10–15% higher than returns for the same category in accumulation phase over the long run. The difference is due largely to tax, as investment earnings are not taxed in retirement phase.

For example, in the 10 years to 30 June 2025, the median return for pension Growth funds was 8.0% per year on average while accumulation Growth funds returned 7.2% per year over the same period.

However, when returns are negative, pension funds typically generate slightly bigger losses in the short term than accumulation funds in the same category. For example, in the year to 31 December 2022, the median return for pension Growth funds was -5.1%, compared with -4.6% for the accumulation equivalent. Only Conservative pension options posted a smaller loss (-2.8%) than their accumulation equivalent (-2.9%).

Chant West senior investment research manager Mano Mohankumar says this is because accumulation funds get a deferred tax benefit when returns are negative.

Although people tend to be more risk averse as they get older, he says most retirees are still invested in their fund’s Growth option, where most accumulation members are also invested. For example, he says that in large industry funds, such as AustralianSuper and UniSuper, most pension fund members are in the Balanced option (with an investment mix that aligns with Chant West’s Growth category). Even so, he says a meaningful number would also be invested in the next risk category down, in line with Chant West’s Balanced category with 41–60% growth assets.

Retirees in retail pension funds (and some industry pension funds) are most likely to be invested in a Lifecycle investment option with a conservative investment mix. Lifecycle funds automatically shift members into a lower-risk investment mix as they age.

In years when shares and listed property perform poorly, as they did in 2022, retirees with a more conservative investment mix will do better than those with a higher exposure to growth assets. The reverse also holds true.

As mentioned earlier, retirees with more exposure to growth assets did best in 2025 when shares were the star performers. Stout-hearted retirees invested in the median All Growth option pocketed a return of 14.7% for the year. Over the long term, though, the advantage of holding a meaningful level of growth assets is clear, as can be seen in the table below.

The following table from Chant West shows pension fund performance across various timeframes for five investment categories at the end of December 2024.

Pension diversified fund performance (results to 30 June 2025)

Note: Performance is shown net of investment fees. It is before administration fees and adviser commissions.

Source: Chant West