Sharemarket delivers super funds windfall

A RECORD-BREAKING sharemarket has delivered a $10,000-plus superannuation boost for many Australians aged over 40, and almost twice that for over-50s.

However, younger people are missing out on windfall gains because of their lower super balances and the fact many withdrew much of their life savings in last year’s Covid-19 early release scheme.

Women, too, are less likely to enjoy the full benefits of booming super fund returns because of the ongoing gender gap between balances.

Default super investment options grew 18 per cent in the 2020-21 financial year and are up about 10 per cent since January 1, according to the Association of Superannuation Funds of Australia (ASFA) and research group Chant West.

Many people don’t realise how much their super has grown since 2020, financial advisers say.

ASFA deputy CEO Glen Mccrea said super’s strong recent run reflected “significant growth” in stockmarkets in Australia and overseas, buoyed by record low interest rates and government stimulus measures to combat Covid.

Australian and overseas shares comprise 50 per cent of super funds’ average asset holdings, and both reached record highs in July and again in August.

Mr Mccrea said $10,000plus investment gains for super fund members aged over 40 reflected their bigger balances built from years of saving and “demonstrates the wonders of compounding”.

People aged 55 to 64 have average super balances near $247,000 and many have enjoyed investment gains this year of almost $25,000, but the rises for under-35s are typically less than $4000.

“One million people have less than $1000 in super and they’re predominantly people who took money out through the early release scheme,” Mr Mccrea said. Their timing couldn’t have been worse – withdrawing cash as shares plunged 37 per cent and then missing out on the rebound.

“We still do have a gender gap in super – part of that is wage rates, but also taking time out of the workforce,” Mr Mccrea said.

Separate research from Industry Super Australia has found women are retiring with 25 per cent less super than men, with the gender super gap to continue for another 40 years.

Industry Super Australia advocacy director Georgia Brumby said Prime Minister Scott Morrison should “stop ignoring the gender super gap” and start paying super on parental leave.

“Unless we take action now, whole generations of women are going to retire with too little savings,” she said.