This year there could be one unexpected extra present sitting under the Christmas tree that really could bring about many happy returns.
The answer is superannuation returns which at this stage look set to be in double figures for calendar 2021 – COVID-19 variants willing – quite an exceptional result given the pandemic year that we have all endured.
Superannuation research house SuperRatings said the double-digit returns achieved so far were made possible by the atmosphere of rising confidence that has come with the economy opening up and lockdowns being lifted.
Above average year that should leave many happy returns
The likely returns are well in excess of a “conventional’’ year in which annual returns would be in the range of 6% to 8% so this is the sort of year that will have a long-term positive effect on superannuation balances – particularly as many contributions will have been made at much lower levels.
SuperRatings executive director Kirby Rappell said growth in 2021 had been robust with the median balanced option up 11.2% and most super funds delivering well in excess of their objectives.
He said it had been “a strong year for superannuation, with returns nearly three-and-a-half times those of calendar year 2020 and almost double the yearly average for the past 20 years.”
The median balanced pension option returned an estimated 0.7% in October and 11.7% over the calendar year to date.
The median pension growth option returned an estimated 0.8% in October and the median capital stable option gained an estimated 0.1% through the month.
Great returns coincide with stapled accounts
The great returns for super come at an interesting juncture for super funds, with funds being “stapled” to workers which means they will follow workers to their new job.
That means it has never been more important to ensure that the fund you are part of is performing well and keeping up with the pack in five year returns as well as annual results.
The arrival of fund stapling is also a great time for members to ensure that multiple super accounts are finally consolidated to reduce fees, ensure there are no multiple insurance policies being paid and that the main super account is a good one.
Despite stapling, members always have the option to change their fund if they want to.
Make sure insurance is appropriate
Stapling also makes it very important to make sure that the life and disability insurance cover that is included with most super accounts is appropriate for the industry that the fund member now works in, with some higher risk occupations requiring different insurance policies.
Insurance that was appropriate for an office worker may no longer be appropriate if the worker now works in a higher risk career, so checking to ensure insurance is appropriate when changing jobs is also vital.