Super account balances top all-time highs before GFC

SUPERANNUATION account balances have topped the all-time highs they reached just before the onset of the global financial crisis in November 2007.

Balances first recovered their pre-GFC highs in September last year. But thanks to a continued surge in share prices the typical balanced superannuation investment option, where most people have retirement savings, returned 11.7 per cent in 2012.

SuperRatings' data shows UniSuper Accumulation (Balanced) was the best-performing balanced option for 2012 with a return of 15 per cent. Second spot was shared by Rest (Core Strategy) and StatewideSuper Marketlink (growth option) with 14.1 per cent.

"Despite the challenging economic conditions, super funds have delivered solid returns," said Jeff Bresnahan, the founder of SuperRatings. "The performance of funds over the year should help members feel more comfortable in the benefits of a diversified portfolio held over the long term."

Even though balanced options spread the money between investments, the performance of shares contributes most to superannuation returns. The typical balanced investment option has half of its money invested in Australian and overseas-listed shares.

Super funds offer their members diversified options as well as those that invest in a single asset class. The best-performing single-asset category was Australian shares with a return of 17.9 per cent in 2012. Cash, with a return of 3.5 per cent, was the worst-performing investment option.

The resurgence in Australian and global shares that has been under way in earnest since the middle of last year has lifted the longer-term performances of balanced options.

SuperRatings data shows that over the 10 years to December 31, 2012, the typical balanced option produced an average annual return of 6.4 per cent. Most superannuation funds target a long-term average annual return of 3.5 percentage points above inflation which, over the long term, sits under 3 per cent.

The best performer over the five years to December 31, 2012, the LGsuper Accumulation (balanced), produced an average annual return of 3.8 per cent, followed by Commonwealth Bank Group Super (Mix 70) with 3.3 per cent and Rest Industry Super (Core Strategy) with 3.2 per cent.

The poor five-year returns coincide with the global financial crisis.