Super Members Council's Warning Amid Market Volatility
The Super Members Council has cautioned Australians against shifting their superannuation into cash amidst current market volatility tied to Middle East conflicts. The Council’s analysis reveals that such moves can result in substantial long-term financial losses.
Switching investment strategies during downturns is a common concern for investors. However, data indicates that switching to cash typically leads to poorer outcomes. Individual investors often struggle with market timing and miss potential recoveries.
The Council’s findings show that an individual with $100,000 in super switching to cash at the COVID-19 market low could be approximately $50,000 poorer after five years. Similarly, during the 2025 tariff incident, a shift to cash could have led to a $7,000 deficit within a year.
Superannuation funds in Australia experienced declines during the Global Financial Crisis and COVID-19 that were less than a third of those seen in major equity markets. This demonstrates the resilience of these funds as they recovered to pre-crisis levels more than a year earlier than the Australian stock market.
Long-Term Superannuation Performance
Superannuation funds in Australia have shown resilience, recovering quicker than major equity markets after the Global Financial Crisis and COVID-19. The system is designed for long-term growth, with profit-to-member funds averaging returns of over 7.5% per annum over the last decade.
Most Australians’ superannuation is invested in balanced options, which diversify risk across various assets and geographies. This strategy helps mitigate the impact of fluctuations in any single market.
“When markets fall, the temptation to switch your super to conservative investment options like cash can mount, but analysis shows it could mean you potentially lock in those losses and miss the recovery,” said Misha Schubert, CEO of the Super Members Council.
Superannuation systems are designed to withstand short-term shocks, utilising investments in infrastructure, property, private equity, and other non-listed global assets to navigate economic disturbances.
Australia’s super system is structured to provide strong returns for members over decades, not just days or weeks. This design involves teams of highly skilled investment experts who manage these funds to ensure their resilience and growth.
For the millions of Australians with retirement savings in super, especially in profit-to-member funds, the system is crafted to handle short-term economic shocks and ensure long-term stability through diverse investments.
Australians are advised to consider the long-term nature of superannuation and the potential risks of missing out on market recoveries when making investment decisions during volatile periods.
