In this guide
Pension funds made a positive start to the new year despite choppy investment markets, with the median Growth fund (61–80% in growth assets) up 0.34% over the month of January, taking the return for the first seven months of the financial year to 6.0%.
This follows the stellar annual return of 10.2% for the 2025 calendar year.
Chant West head of superannuation investment research Mano Mohankumar says market volatility was due to heightened geopolitical risks, from US military action in Venezuela to renewed tariff threats against Europe over Greenland, which were subsequently dropped.
“However, markets focused on the global economic backdrop that still remains positive and expectations of continued earnings growth.”
Super fund returns in January were constrained by the surging Aussie dollar, which turned a 1.7% gain from international developed market shares into a loss of 2.7% in unhedged terms. Mohankumar says funds have about 70% of their international shares exposure unhedged.
Emerging markets continue to outperform, up 3.6% unhedged, while Australian shares rose 1.7%. Bonds also kept their head above water; Australian and international bonds both returned 0.2%.
The table below shows median pension fund performance across various timeframes for five investment categories to the end of January 2026.
Pension fund performance (results to 31 January 2026)
| Risk category (% growth assets) | 1 mth (%) | 3 mths (%) | FYTD (%) | 1 yr (%) | 3 yrs (% per yr) | 5 yrs (% per yr) | 7 yrs (% per yr) | 10 yrs (% per yr) | 15 yrs (% per yr) |
|---|---|---|---|---|---|---|---|---|---|
| All Growth (96–100%) | 0.7 | 0.2 | 8.0 | 10.3 | 14.0 | 11.2 | 11.2 | 11.0 | 10.6 |
| High Growth (81–95%) | 0.5 | 0.3 | 6.8 | 8.6 | 11.9 | 10.1 | 10.4 | 10.3 | 9.7 |
| Growth (61–80%) | 0.3 | 0.2 | 6.0 | 7.7 | 10.2 | 8.5 | 8.6 | 8.8 | 8.7 |
| Balanced (41–60%) | 0.5 | 0.4 | 4.8 | 7.1 | 8.4 | 6.8 | 6.8 | 7.1 | 7.4 |
| Conservative (21–40%) | 0.4 | 0.3 | 3.4 | 6.0 | 6.4 | 4.9 | 5.0 | 5.2 | 5.8 |
Source: Chant West. Performance is shown net of investment fees and tax, before administration fees and adviser commissions.
Tax-free returns
Despite holding the same underlying investments, pension fund returns tend to be roughly 10–15% higher than returns for the same category in accumulation phase over the long run. The difference is due largely to tax, as investment earnings are not taxed in retirement phase.
For example, over the last 15 years, pension Growth funds returned 8.7% per year, on average, while the accumulation equivalent returned 7.8% – a difference of almost 1%.
Conversely, when returns are negative, pension funds typically generate slightly bigger losses in the short term than accumulation funds in the same category. For example, in November, the median return for pension Growth funds was -0.5%, compared with -0.4% for the accumulation equivalent. Only Balanced and Conservative pension options posted the same loss as their accumulation equivalents, at -0.3% and -0.1% respectively.
Mohankumar says this is because accumulation funds get a deferred tax benefit when returns are negative.
Although people tend to be more risk averse as they get older, he says most retirees are still invested in their pension fund’s Growth option, where most accumulation members are also invested. For example, he says that in large industry funds, such as AustralianSuper and UniSuper, most pension fund members are in the Balanced option (with an investment mix that aligns with Chant West’s Growth category). Even so, he says a meaningful number would also be invested in the next risk category down, in line with Chant West’s Balanced category with 41–60% growth assets.
Retirees in retail pension funds (and some industry pension funds) are most likely to be invested in a Lifecycle investment option with a conservative investment mix. Lifecycle funds automatically shift members into a lower-risk investment mix as they age.
Over the long term, though, the advantage of holding a meaningful level of growth assets is clear.
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