Share slide not so super

BABY boomers planning to cash in their super should sit tight and remain calm as they brace for some gloomy news.

Share slide not so super

BABY boomers planning to cash in their super should sit tight and remain calm as they brace for some gloomy news.

The Australian share market last week experienced its worst consecutive days of slides in 26 years, with losses since the start of 2008 piling up to $282 billion.

Super funds have already copped a smack, with returns set to fall by 5.8 per cent in January on an annualised basis, an audit of Australia's top 50 funds by independent ratings group SuperRatings estimates.

Since July, returns on these balanced superannuation funds have fallen by 4.1 per cent.

But before bad US sub-prime loans stirred fears of an American recession, the most popular Australian super funds in the year to June were posting returns of 15.65 per cent.

In calendar 2007, these super funds were posting eight per cent returns, marking the fifth consecutive year of gains.

SuperRatings managing director Jeff Bresnahan said balanced super funds - which include local and global shares along with property - experienced negative growth rates about once every six years.

"On average, we'd expect a balanced option to show a loss once every six years ... and there's a realistic chance that this is going to be that year,'' he said.

"But the last few days has shown how quickly the market can bounce back.''

Industry Super Network executive manager David Whiteley said balanced superannuation funds would deliver single digit figure returns in 2008 as share prices fell.

"This year people should be prepared for a return of less than 10 per cent,'' he said.

"Because we've obviously got the correction that has occurred in global markets, the returns on those shares is going to be quite a bit less this financial year.''

Combined Pensioners and Superannuants policy co-ordinator Paul Versteege said people intending to retire should not panic about share market uncertainty.

"Intending retirees in a super fund are better placed to ride this out ... as long as the super fund knows what it's doing they'll be okay,'' he said.

"The biggest danger is they panic and think the sky is falling in.

"It's not. The stock market have produced enormous gains over the past five years and it's just a little choppy at the moment.''