After a bright start to the financial year, pension funds hit some turbulence in November, with the median Growth fund (61–80% in growth assets) down 0.5% over the month.
Even so, with only a few weeks left in 2025, the average pension Growth fund was up a stellar 9.6% in the calendar year to the end of November.
International shares were the main driver of returns once again, with international share markets up 17% so far this year. Australian shares were up a more modest 8.9% while Asian shares and emerging markets were the standouts, up 34% and 28% respectively. However, all major asset classes have produced positive returns in 2025 to date.
At this rate, most retirees will have seen their pension account balance grow in 2025 even after withdrawing their minimum pension payments.
The table below shows median pension fund performance across various timeframes for five investment categories to the end of November 2025.
Pension fund performance (results to 30 November 2025)
| 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%) | -0.7 | 2.2 | 6.8 | 12.3 | 13.5 | 11.3 | 10.8 | 9.6 | 10.2 |
| High Growth (81–95%) | -0.6 | 1.8 | 5.8 | 10.2 | 12.0 | 10.1 | 10.3 | 9.8 | 9.9 |
| Growth (61–80%) | -0.5 | 1.9 | 5.0 | 9.0 | 10.3 | 8.5 | 8.7 | 8.2 | 8.9 |
| Balanced (41–60%) | -0.3 | 1.6 | 4.0 | 8.2 | 8.7 | 6.8 | 7.0 | 6.8 | 7.4 |
| Conservative (21–40%) | -0.1 | 1.3 | 3.0 | 6.6 | 6.5 | 4.8 | 5.1 | 5.1 | 5.9 |
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, pension Growth funds returned 8.9% per year, on average, while the accumulation equivalent returned 7.9% – a difference of 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 November, the median return for pension Growth funds was -0.5%, compared with -0.4% for the accumulation equivalent. Only Balanced and Conservative pension options posted the same loss as their accumulation equivalents, at -0.3% and -0.1% respectively.
Chant West head of super investment research Mano 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.
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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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