The peak body for the superannuation industry today warned workers to beware being caught out by a popular myth about superannuation returns.
The Association of Superannuation Funds of Australia (ASFA) said that since the GFC, there had been commentary to the effect that workers would be better off putting their money in the bank than in their super fund.
Over the longer term, the majority of people in the majority of funds are better off with their retirement savings in superannuation than putting all their money in a term deposit.
An analysis of RBA and SuperRatings statistics provide a useful comparison to why Australians should be cautious about where they invest their money (see Table 1).
"It is always best to compare your specific situation but in our view, the majority of people are better off in a diversified fund rather than investing their money in cash for the long-term," said Pauline Vamos, chief executive of ASFA.
"It is important to remember that superannuation is a long-term investment, taxed at concessional rates, and is invested in a larger number of different types of assets.
"We must also remember that funds provide a range of services for the benefits of fund members, and the important role the superannuation pool plays in the economy."
The accumulation of superannuation not only assists Australians in retirement, it also boosts the Australian economy, increasing the nation's GDP, creating jobs and providing much-needed private and public infrastructure investment.
While the headline retail interest rates have been attractive, interest earned is subject to tax at an individual's marginal tax rate. Superannuation contributions and investment returns however are taxed concessionally (15 per cent).
Source: RBA, SuperRatings, ASFA (for periods ending October 2011)
For someone with a zero tax rate, term deposits have been line ball with an average balanced super fund portfolio.
Media contacts:
Pauline Vamos, 0433 169 342
Rebecca Glenn, GM marketing and communications, 0416 170 439
Megan McDougall, communications and media co-ordinator, (02) 8079 0849
About ASFA - the voice of super
The Association of Superannuation Funds of Australia is the peak industry body representing the superannuation and retirement industry. Its members represent over 90 per cent of the approximately 12 million Australians with superannuation. ASFA members manage or advise on the bulk of the $1.3 trillion in superannuation assets as at September 2011. ASFA is the only organisation that represents all types of superannuation funds (retail, industry, corporate and public sector) and associated service providers.