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Super balances increase for fifth straight year

Super blocks

2016 returns beat 10-year annual average.

Despite a volatile market and uneasiness surrounding low global growth, Australia’s superannuation funds returned positive growth in 2016, supported by a push late in the year as a result of the Santa rally.

The December rally delivered 2.1%, according to independent research firm SuperRatings, stretching the Median Balanced Option to an estimated 7.2% for the calendar year.

This result represents the fifth consecutive year of growth for Australian super funds, after annual returns stabilised in 2011.

2016's returns were slightly below the 7.7% yearly average for the last seven years but significantly higher than the 10-year return rate of 5.2% per year.

SuperRatings chairman Jeff Bresnahan described 2016 as a year of extremes.

"Super funds struggled at the start of the year, with many posting significant losses, but recovered as markets stabilised," he said.

"Of course, we then had Brexit and the corresponding rebound, a bearish October ahead of the US election, and then a big lift to end the year, led by equities."

The growth rate of Aussie super funds was reflective of the Australian share market's trajectory, which posted a capital gain of 7% in 2016.

Earlier this week The Conversation explained, in-depth, how superannuation in Australia has changed since 1992, noting the abolition of the "10% rule", regulation of contributions and the gender gap.

Last month, a Rice Warner study suggested average insurance premiums through superannuation were too high for some Australians, slashing hundreds of thousands of dollars off retirement balances.

Plus, one third of workers are being stiffed by employers sidestepping compulsory super contributions.

If you're looking to switch funds, consolidate your super, better manage your self-employed savings or take out income protection for your nest egg, it's best to compare options and make the right decision.

Picture: Shutterstock

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