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Date Published : Thursday, March 27, 2008
Amid rising interest rates and an uncertain financial climate, one sector of the market has been performing above the norm for the past few years - superannuation funds.
Over the past couple of years, returns on super funds have outstripped many expert predictions and those retiring over the next couple of years should have a healthy nest egg to fall back on and enjoy for the rest of their lives.
However, the benefits from these savings accounts at the moment are likely to plateau very soon, with some super fund bringing minimal returns by the end of the year, the Daily Telegraph reports.
Reports and rumours that superannuation policies often see yearly returns of 13 per cent or more are completely unfounded, according to MLC investment strategist Brian Parker.
Mr Parker told the newspaper: "The other day I was at a BBQ and I heard this guy say to another: 'You should get into super, it's paying 13 per cent'.
"But, no, it's not. People talk about returns as if it's interest rates. Super has delivered 13 per cent over the past couple of years."
Mr Parker cited research from Dalbar which found that over the past 20 years the S&P500 returned an average of 11.8 per cent.
But it also found the average investor earned only 4.3 per cent.
As a result of the slowing super market, changes to the sector - allowing consumers to borrow money in order to maximise super returns - were orchestrated in the latter days of the Howard government.
The changes were introduced in February 2008 and are expected to see many more Australians invest in their retirements.
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