It’s a good news story for industry superannuation funds in spite of high levels of market volatility in January and February of this year. Trumpism, fear of Brexit and tensions on the North Korean peninsula certainly sent a few shivers through the markets, but the bulls returned and ran strongly through June.
The stipulated goal for most growth funds is to outperform inflation by 3% or 4% and given the current very low levels of inflation of around 2%, this year’s return has added real value to members’ accounts. Funds with high allocations of cash and traditional bonds did not perform as well as funds with high allocations to unlisted assets such as infrastructure and property, which tended to outperform. Shares also contributed to the strong growth both domestically and internationally.
Again, experts have calculated that industry funds outperformed the retail funds by approximately 1% mainly because of their higher allocation to long term investments and shares. Over a long period (working life) that can amount to a significant improvement to a member’s retirement benefit.
Now for the good news! As NGS Super celebrates its 30 year anniversary of serving members and helping them to secure a dignified retirement, returns in almost all asset classes were strong. At the time of writing (3 July 2018) the final returns (hard close prices) are not yet available, but the soft close returns show a stunning result.
The NGS Super default option, Diversified (My Super) is estimated to come in at 10.5% based on the information at hand. The top performing asset class last financial year was international shares which is estimated to return 13.94%. The lowest performing asset classes were cash and term deposits and diversified bonds which returned around 1.84% and 2.23% respectively.
Superannuation is a long term investment so annual returns should be seen in the context of longer periods of time. The five year return for the default option, NGS Diversified (MY Super) was 9.10%, a significant outperformance of the target CPI plus 3%.
NGS Super was established on 1 July 1988, as the industry fund for non government schools in NSW. Thanks to the hard work and foresight of the IEU, the AIS and Catholic hierarchy, teachers and support staff in independent schools were able to begin contributing to superannuation a full four years earlier than when super became compulsory for all workers with the Super Guarantee starting in 1992.
The original name given to the fund was Non-Government Schools Superannuation Fund (NGSSF) which was later shortened to NGS Super. The initial contribution from employers into the new fund in 1988 was a whopping 3% and death and total and permanent disability insurance was set at $1 per week. The investment options were minimal and income protection insurance was not available in the early days. A pension (or income stream) option was introduced in 2001.
With subsequent mergers and general membership growth in the independent schools sector, the fund has grown to approximately 100,000 members with about nine billion dollars under management. And a new merger is on the horizon. Over the years significant improvement has been made in the areas of wider investment options, more insurance options, greater IT capability, website, and a strong internal management team and an in house investment team have both been established.
The core value of members first remains at the heart of the fund as we pass the 30 year mark. The trustee, management and staff extend our best wishes for a successful, happy and healthy new financial year to all our members!