While super funds’ pension products returned to positive territory in the month of March, members’ accounts have been savaged such that a return to paid employment has been the only solution for some members, according to a survey by Chant West.
The latest pension fund survey (the third in a quarterly series) shows that growth-option funds (61-80 per cent growth assets), had a positive 3.0 per cent return on average during March, but still a minus 3.8 per cent return for the quarter and minus 18.6 per cent for the year to date. For conservative growth-option funds, the March return was 1.3 per cent, the March quarter was minus 1.2 per cent and the year-to-date minus 6.8 per cent.
The report says of the year-to-date losses: “Pension members can ill afford to suffer losses of this magnitude since, unlike active working members, they don’t have the opportunity to replenish their accounts with new contributions.”
Due to market volatility, the gap between the best and worst-performing funds has widened, with the best-performing growth option fund (Care Super balanced) earning minus 13.0 per cent and the worst (AMP Future Directions) earning minus 24.8 per cent for the nine months to March.
The report notes that because pension funds do not pay tax, unlike super funds, they tend to outperform their super counterparts in up markets and underperform in down markets because they cannot cushion their losses to offset capital gains.
The report also includes information on each pension fund’s allocation to unlisted assets. Chant West says this allocation should be considered for comparative purposes because of less frequent valuations, usually by a single valuer rather than the market.
The top 10 performing growth-option pension funds for the year to date were: Care Super (minus 13.0 per cent), First State Super (minus 13.4 per cent), REST ‘core’ (minus 13.5 per cent), Tasplan (minus 13.7 per cent), REST ‘diversified’ (minus 13.7 per cent), EquipSuper (minus 13.9 per cent), Legal Super (minus 13.9 per cent), AustralianSuper (minus 14.1 per cent), UniSuper (14.7 per cent) and Catholic Super (minus 15.3 per cent).
The bottom 10 growth funds were: AMP Future Directions (minus 24.8 per cent), CFS First Choice (minus 24.5 per cent), Mercer (minus 23.3 per cent), Super SA (minus 23.0 per cent), MLC ‘balanced’ (minus 22.8 per cent), MLC ‘Horizon 4’ (minus 22.4 per cent), United Capital (minus 22.4 per cent), AXA Summit (minus 21.4 per cent), GESB (minus 21.2 per cent) and Maritime Super (minus 20.9 per cent).