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(Australian Associated Press)
Super members have good reason to be optimistic about what 2020 might deliver to their balances but they should not expect the same fat returns as last year, a research house says.
SuperRatings says 2019 was the best year for superannuation funds since 2013, with the median balanced option returning 13.8 per cent.
Despite a December sell off in local shares, funds entered the new year in a strong position, it said.
“We’re anticipating a solid year for super in 2020, but the key challenge for funds will be the low return environment,” SuperRatings executive director Kirby Rappell said.
“Even with the possibility of a pickup in economic growth, yields are extremely low and it’s getting harder to find opportunities in the market.”
He said it will be more challenging fundamentally than in 2019 because company earnings growth was slowing, and Australian consumers are under pressure.
“That doesn’t mean it will be a bad year, but super members should not expect to bank another 13 per cent.”
For people already retired, pensions performed well in 2019.
The median balanced option returned an estimated 14.9 per cent over 2019, compared to 18.2 per cent for the growth option and 8.0 per cent for the capital stable option.
There were a number of mergers in 2019 and SuperRatings expects more in 2020 as funds come together to achieve greater scale.