$84b of super savings wiped out

ABOUT $84 billion has been wiped off superannuation accounts since January as the financial market turmoil hits our retirement funds.

Kid with piggy bank /file

$84b of super savings wiped out

ABOUT $84 billion has been wiped off superannuation accounts since January as the financial market turmoil hits our retirement funds.

Every balanced option super fund is expected to deliver negative returns this financial year.

The average working Australian male in a balanced super option has lost about $5600 from their retirement savings so far in 2008, while women have lost about $2800, due to their lower average balances.

The standard balanced option super account is down 7 per cent so far this year, according to Superratings managing director Jeff Bresnahan.

"The balanced option has lost 7 per cent this year and is down almost 5 per cent in the financial year to date," Mr Bresnahan said.

That equals about $84 billion lost in less than three months, according to estimates released at the Conference of Major Superannuation Funds yesterday in Brisbane.

The Assistant Treasurer and minister responsible for Superannuation, Senator Nick Sherry, was asked at the conference about the possibility, because of bigger losses, of large numbers of super fund members withdrawing their savings.

"I have spoken with both APRA and ASIC and I know they are going to keep a close eye on fund liquidity to ensure that any events that put pressure on a particular fund are able to be handled," he said.

"It is important for funds to think about come July 1 and the delivery of negative rates of return to members.

"We need to be vigilant about this issue," he said.

Senator Sherry pointed out that the last time the super industry reported negative annual returns to members, in 2001-02, portability and choice of fund did not exist.

All funds are expected to lose money this financial year, unlike the last period of generally low and negative superannuation returns in 2001-2002, when about half of funds recorded falls.

"This is the first time we have seen such a confluence of events since the introduction of compulsory super."

"I don't think there is any fund that is in positive territory at the moment," Mr Bresnahan said. "It may well be that a few of them end up in positive territory by June but they will have to make up a lot of ground."

The balanced option is traditionally the default investment choice used by major super funds and houses the retirement savings of four in five working Australians.

"We expect that every six years we will go through a cycle of lower returns," Australian Institute of Superannuation Trustees chief executive Fiona Reynolds said yesterday.

"Most people will not be concerned about recent falls because they are not retiring for many years.

However, people approaching retirement may need to seek financial advice.

"Obviously people coming up to retirement now would be concerned by events of the last few months."

The average balanced super investment option has 32 per cent of funds invested in Australian shares and 24 per cent in international share markets.

The average super balance for men is estimated by the Association of Superannuation Funds at about $80,000 and $40,000 for women.

Average retirement payouts from superannuation are $155,000 for men and $73,000 for women.