Pension fund performance: Monthly returns to April 2025

In acknowledgement of the increasing importance of retirement phase in our superannuation system, we are bringing you monthly pension fund returns in addition to our monthly super fund performance update.

Thanks to Chant West, we will provide returns for their five diversified pension fund categories – Conservative, Balanced, Growth, High Growth and All Growth. These are the same categories Chant West uses for accumulation funds and generally hold the same underlying investments. This means pension fund returns are driven by the same factors as accumulation fund returns.

On again, off again US tariffs created mayhem on global markets in April, but super pension funds weathered the confusion to post positive returns for the month and the financial year to date.

The median pension Growth fund (61–80% growth assets) rose 0.7% in April, bringing the return for the first 10 months of the financial year to 5.8%. But it was a bumpy ride.

The unexpected scale of Trump’s tariff announcement early in the month sent shares plummeting. But markets rallied in relief later in the month when Trump paused tariffs and negotiated some reductions.

By month’s end, developed market shares were down just 1.8% hedged and 0.4% unhedged, while Australian shares were up 3.6%. Bonds also provided some cheer, highlighting the importance of diversification, with Australian and global bonds up 1.7% and 0.9% respectively.

Chant West senior investment research manager Mano Mohankumar says: “If you panicked in early April and switched to a lower risk option or cash, not only would you have crystallised your losses, you would have also missed out on the market rebound. That’s why we remind members that super is a long-term investment and encourage them to see a financial adviser if they’re thinking of switching options.”

Tax-free returns

Despite holding the same underlying investments, pension fund returns tend to be roughly 10–15% higher than returns for the same category in accumulation phase over the long run. The difference is due largely to tax, as investment earnings are not taxed in retirement phase.

For example, while the median return for pension Growth funds was 0.7% in April, the median return for accumulation Growth funds was 0.6%. And in the first 10 months of the 2024-25 financial year pension Growth funds returned 6.7% while the accumulation equivalent returned 5.8% – a difference of almost 1%.

Conversely, when returns are negative, pension funds typically generate slightly bigger losses in the short term than accumulation funds in the same category. For example, in the year to 31 December 2022, the median return for pension Growth funds was -5.1%, compared with -4.6% for the accumulation equivalent. Only Conservative pension options posted a smaller loss (-2.8%) than their accumulation equivalent (-2.9%).

Mohankumar says this is because accumulation funds get a deferred tax benefit when returns are negative.

Although people tend to be more risk averse as they get older, he says most retirees are still invested in their fund’s Growth option, where most accumulation members are also invested. For example, he says that in large industry funds, such as AustralianSuper and UniSuper, most pension fund members are in the Balanced option (with an investment mix that aligns with Chant West’s Growth category). Even so, he says a meaningful number would also be invested in the next risk category down, in line with Chant West’s Balanced category with 41–60% growth assets.

Retirees in retail pension funds (and some industry pension funds) are most likely to be invested in a Lifecycle investment option with a conservative investment mix. Lifecycle funds automatically shift members into a lower-risk investment mix as they age.

Over the long term, though, the advantage of holding a meaningful level of growth assets is clear.