Since Superannuation Guarantee was introduced more than 26 years ago, the average long-term annual compound median return generated on a ‘balanced’ super fund account is 7.5% a year for the 26-year period to 30 June 2018, according to regular data released by superannuation ratings agency, SuperRatings (noting the compound return is calculated by SuperGuide).
Median return means the return delivered by the investment option in the middle of a list that starts with the balanced/growth investment option with the lowest return and ends with the balanced/growth investment option with the highest return. Note that the super fund achieving the median return each year may differ from year to year. The average annual compound median return is simply dividing by 26, the total accumulated median returns over 26 years.
A balanced investment option, which some super funds may call ‘growth’ or ‘balanced growth’, typically has between 60% and up to 76% in growth-style assets such as shares and property.
The table below lists the return for each year for the median balanced super fund over the past 26 years.
Background: Superannuation Guarantee (compulsory employer super contributions) was introduced from 1 July 1992 at a starting contribution rate of 3%. The SG rate was progressively increased until it reached 9% from July 2002. The SG rate increased again to 9.25% from July 2013, and then increased to 9.5% from July 2014, and will eventually increase to 12% from July 2025. Note that quarterly SG contributions only became a legal requirement from July 2003, which means before this date, many employers only made SG contributions at the end of each financial year.
SuperGuide note: SG did not commence until 1 July 1992, and before 2003, employers could make annual SG contributions, which means many Australians would not have had SG contributed to super accounts until the 1993/1994 financial year. Taking this timing into account, the relevant financial years since the introduction of SG is effectively 25 full financial years. When working out the average return over 25 years, the average median return is 7.4% (7.432%).
SR50 Balanced Index: Financial year returns since the introduction of compulsory super
|Financial year (1 July to 30 June)||Annual return (%)|
|1993 (1 July 1992 to 30 June 1993)||9.2|
|Accumulated total median returns over 26 years||195.0%|
|Average annual return over 26 years||7.5%|
Source: Data from table sourced from SuperRatings over a period of time (www.superratings.com.au), but calculation of accumulated total median returns over 26 years, by SuperGuide.