Despite challenging economic and geopolitical conditions, superannuation pension funds continued their run of stellar returns in the year to December 2025, with the median pension Growth fund (61–80% growth assets) up 10.2%.
Once again, shares were the main driver of the result, with international shares leading the way thanks to the depreciation of the Australian dollar.
International shares returned 18.6% on a currency-hedged basis, but 12.5% unhedged due to the stronger Aussie dollar (up from US62c to US67c). Australian shares were up a more modest 10.7%.
Chant West senior investment research manager Mano Mohankumar says Growth funds, on average, have 31% of their total investments in international shares and a further 25% in Australian shares.
Remarkably, given worsening geopolitical tension, tariff uncertainty and a difficult investment environment, all major asset classes produced positive returns in 2025. Traditional defensive assets also held up well, with cash returning 4%, Australian bonds 3.2% and international bonds 4.4%.
Australian and international listed property were up 9.7% and 7.5% respectively, while international listed infrastructure returned 11.6%.
Unlisted assets also performed well. Final returns are still being calculated, but Chant West estimates that unlisted infrastructure gained 7–10% over the year and private equity finished with a low double-digit return. Even unlisted property was back in positive territory with an estimated return of 3–6%, after two years in the red.
As a result, even the most conservative investment option (21–40% growth assets) returned 6.9% in the year to December, although higher-risk options were the main beneficiaries of buoyant share markets.Â
At this rate, most retirees will have seen their pension account balance grow in 2025 even after withdrawing their minimum pension amount.
Pension fund categories – Conservative, Balanced, Growth, High Growth and All Growth – are the same as those for accumulation funds and, by and large, hold the same underlying investments. So, pension fund returns are driven by the same factors as accumulation fund returns.
Pension funds outperform accumulation funds
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, in the 10 years to 31 December 2025, the median return for pension Growth funds was 8.4% per year on average, while accumulation Growth funds returned 7.7% per year over the same period.
However, 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.
In years when shares and listed property perform poorly, as they did in 2022, retirees with a more conservative investment mix will do better than those with a higher exposure to growth assets. The reverse also holds true.
As mentioned earlier, retirees with more exposure to growth assets did best in 2025 when shares were the star performers. Stout-hearted retirees invested in the median All Growth option pocketed a return of 13.1% for the year. Over the long term, though, the advantage of holding a meaningful level of growth assets is clear, as can be seen in the table below.
The following table from Chant West shows pension fund performance across various timeframes for five investment categories at the end of December 2025.
Pension diversified fund performance (results to 31 December 2025)
| Fund category (% growth assets) | 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) | 13.1 | 15.3 | 11.1 | 11.3 | 9.7 | 10.1 |
| High Growth (81–95) | 11.3 | 13.3 | 10.0 | 10.9 | 9.9 | 9.8 |
| Growth (61–80) | 10.2 | 11.4 | 8.4 | 9.0 | 8.4 | 8.7 |
| Balanced (41–60) | 8.8 | 9.4 | 6.7 | 7.1 | 6.9 | 7.3 |
| Conservative (21–40) | 6.9 | 7.0 | 4.9 | 5.2 | 5.2 | 5.9 |
Note: Performance is shown net of investment fees. It is before administration fees and adviser commissions.
Source: Chant West
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