In this guide
As hopes for a quick end to the US-Iran war in the Middle East faded, pension fund returns slumped in March, with the median Growth fund (61–80% in growth assets) down 3.5% over the month.
Even so, returns for the first nine months of the financial year were a positive 3.1% and markets have rebounded strongly in April so far on renewed hopes for an end to hostilities, falling oil prices and solid corporate earnings.
Chant West head of superannuation investment research Mano Mohankumar urges members to keep the current short-term market turbulence in perspective, as returns tend to be positive in the long run. While it can be particularly difficult for recently retired members to stand by as their balance falls, Mohankumar says most people can afford to be patient.
“Members who panicked after seeing their balances fall in March and switched to lower-risk options or cash not only crystallised paper losses, but also missed out on the subsequent V-shaped rebound.”
“We would encourage members who are thinking of switching options to see a financial adviser,” he says.
The table below shows median pension fund performance across various timeframes for five investment categories to the end of March 2026.
Pension fund performance (results to 31 March 2026)
| Risk category (% growth assets) | 1 mth (%) | 3 mths (%) | FYTD (%) | 1 yr (%) | 3 yrs (% per yr) | 5 yrs (% per yr) | 7 yrs (% per yr) | 10 yrs (% per yr) | 15 yrs (% per yr) |
|---|---|---|---|---|---|---|---|---|---|
| All Growth (96–100%) | -5.8 | -3.6 | 3.7 | 11.3 | 12.4 | 8.9 | 9.8 | 10.5 | 10.2 |
| High Growth (81–95%) | -4.3 | -2.6 | 3.4 | 9.9 | 10.5 | 8.4 | 9.0 | 9.7 | 9.4 |
| Growth (61–80%) | -3.5 | -1.9 | 3.1 | 9.0 | 9.1 | 7.2 | 7.6 | 8.3 | 8.4 |
| Balanced (41–60%) | -2.7 | -1.1 | 3.1 | 7.6 | 7.7 | 6.0 | 6.2 | 6.7 | 7.0 |
| Conservative (21–40%) | -1.9 | -0.5 | 2.4 | 5.7 | 5.8 | 4.4 | 4.6 | 4.9 | 5.6 |
Source: Chant West. Performance is shown net of investment fees and tax, before administration fees and adviser commissions.
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, over the last 15 years to March 31, pension Growth funds returned 8.4% per year, on average, while the accumulation equivalent returned 7.5% – a difference of almost 1%.
Conversely, when returns are negative, as they were in March, pension funds typically generate slightly bigger losses in the short term than accumulation funds in the same category. For example, in March, the median return for pension Growth funds was -3.5%, compared with -3.2% for the accumulation equivalent. All pension risk options, from All Growth to Conservative, also underperformed their accumulation fund equivalent in March.
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 pension 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.
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