In a year marked by economic uncertainties, Australian superannuation funds have demonstrated remarkable resilience, posting a 10% growth in the 2025 financial year.
This increase stands out, especially considering the initial turbulence brought on by global market instability, much of it stemming from U.S. President Donald Trump’s controversial economic agenda. The ongoing fluctuations in the international market had many Australian retirees and pre-retirees worried about the future of their nest eggs. Despite this, a strong recovery has restored confidence in the system.
The recovery, fueled by both market rebounds and long-term investment strategies, offers valuable insights into the strength of Australia’s superannuation system. This article examines the key factors behind the rise in superannuation fund returns and what it means for the future of Australian retirement savings.
The Economic Impact of Trump’s Policies
When former U.S. President Donald Trump unveiled his “Liberation Day” tariffs earlier this year, global markets responded with immediate volatility. These tariffs, designed to reshape international trade, sent stock markets into a downward spiral. Major global indexes plummeted, and the Australian superannuation funds, directly affected by international markets, saw their balances dip.
For many Australians, especially retirees, the turbulence caused significant concern. The sharp drop in superannuation balances was a reminder of how vulnerable retirement savings can be to global economic policies. However, the Australian super industry demonstrated resilience, and the early fears of a prolonged downturn were alleviated as markets slowly began to recover.
A Strong Recovery and Unforeseen Growth
Kirby Rappell, Executive Director of SuperRatings, provided an optimistic view of the superannuation sector’s performance. Despite the market’s early downturn, Rappell highlighted the unexpected 10% growth in superannuation funds. “What a year. I don’t think we all would have guessed we’d end up at double digits,” he said in an interview on Business Now.
Initially, the returns were slow, with growth reaching only 1% during some months. However, the market’s eventual rebound has been stronger than expected, with the average Australian super fund rising by 10% for the 2025 financial year. This growth, especially after the fluctuations, underscores the stability and potential of long-term investments, particularly for Australians who remained invested throughout the ups and downs.
Historical Trends and Long-Term Performance
Looking at the broader picture, Rappell pointed out that the performance of superannuation funds has generally been positive over the past 16 years. Since the bottom of the Global Financial Crisis (GFC), the superannuation industry has only experienced three negative returns. This pattern highlights the long-term growth potential of superannuation funds, despite periodic market turbulence.
In fact, the historical data indicates that since 1992, the average super fund has seen an annual return of around 7%. Even during market disruptions, the long-term growth trajectory remains strong, and this trend is expected to continue in the coming years. Future returns are projected to range between 7% and 14%, reflecting ongoing market recovery and stability.
Industry Consolidation and Its Effect on Returns
The superannuation industry in Australia has undergone significant consolidation over the past few years. In 2005, there were approximately 1,500 super funds operating in the country. Today, that number has dwindled to less than 100. This consolidation is expected to have both positive and negative effects on the industry’s future growth.
While the reduction in the number of super funds may limit choice for investors, it is also seen as an opportunity for improved innovation and better performance. As fewer funds compete for market share, it is anticipated that those that remain will be able to offer more tailored, high-quality investment options to their members. Industry experts, like Rappell, emphasize the importance of maintaining innovation within the sector to ensure continued success.
