CHART: The sorry state of returns from superannuation funds this year

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Most superannuation accounts will have staggered, exhausted to the end of the 2016 financial year with a slightly positive result.

Median balanced accounts — those with exposure of between 60% and 76% to growth assets — where up to 70% of Australians have their money, will have gained only about 2.3% over the 12 months.

However, even this small return, barely covering inflation, is better than the stock market. Total returns on Australian shares, as measured by the All Ordinaries Accumulation index, were just 0.6% in 2015-16, well below the 20-year average 10.8%.

“In what can be likened to a title fight, (super) funds have had to withstand markets that dragged them into negative territory in six out of the 12 months, including a late Brexit onslaught which helped drag the funds down by around 1.3% in the month of June,” says Jeff Bresnahan of analysts SuperRatings.

But the result is still the seventh consecutive positive result since the depths of the GFC.

“Overall, we expect the average Australian in a balanced option to see their super increase by around 2.3%, but it will be very much the case of haves and have nots when it comes to individual fund returns,” says Bresnahan.

“Once again those in funds that have underperformed this year will see their returns up to 7% lower than the more successful funds.”

SuperRatings expects results to range between minus 1% and positive 6%, depending on the fund.

Here’s how super has performed since compulsory contributions started in 1992:

An average return of 7% sees a super balance double about every ten years.

The estimated median balanced option return of 2.3% for 2015-16 is the lowest since 2011-12 when funds returned just 0.4%.

However, in all other years since the GFC, funds have performed above expectations.

SuperRatings says the 10-year returns are not quite hitting a target return of CPI plus 3.5% target.

“We expect 2016-17 will continue to present challenges, but long-term performance should continue to hold up,” says Bresnahan

“There is no doubt that the volatility experienced in financial markets over the year has resulted in subdued returns and, with this in mind, super fund members should be pleased with a positive result.”

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