Strong Returns for Pension

20-Sep-2018

Pension members will be pleased to learn that investment returns for VISSF have been very strong over 2018, with the diversified options benefiting from their exposure to Australian and global shares. For the year ending 30 June, the All Growth option produced a 13.4% return for members, while the Balanced and Conservative options delivered 10.4% and 6.2% respectively.  For members with Transition to Retirement Pensions, the returns were slightly lower, due to the change in taxation status that took effect from 1 July 2017, resulting in the All Growth option producing an 11.6% return, while the Balanced and Conservative options delivered 9.1% and 5.4% respectively.

Markets began the financial year positively, with shares rising on the back of improving US and European economic data. Shares also benefited from better-than-expected Chinese growth and general optimism regarding the global growth outlook. Limiting the early gains were ongoing tensions between the US and North Korea, and the Fed’s decision to begin unwinding its massive, post-global financial crisis balance sheet. 

The positive drive at the start of the financial year continued for much of the period amid further evidence economic activity globally was gathering momentum. However, shares moved sharply lower in early February as US bond yields shot to a four-year high following the release of stronger-than-expected wages data. The surprising outcome sparked fears the Fed may accelerate its rate hike agenda.

Shares recovered somewhat toward the end of February as investors bet the selloff was nothing more than an overdue correction following an extended period of gains. Towards the end of the financial year shares were also impacted by the threat of a potential US-China trade war after Trump slapped approximately USD50 billion in tariffs on Chinese imports.

VISSF continues to meet investment objectives and maximise returns relative to inflation, as measured by the Consumer Price Index (CPI), with our diversified Pension options outperforming their CPI relative investment objectives across all periods to 30 June 2018.

  
See the table below for investment return details. 

Account Based Pension
Year ended 30 June 3 year compound 5 year compound 7 year compound 10 year compound
One year % average % p.a. average % p.a. average % p.a. average % p.a.
All Growth 13.4 10.1 12.5 11.4 8.0
Objective (CPI + 3.5%) 5.6 5.2 5.4 5.4 5.6
Outperformance 7.8 4.9 7.1 6.0 2.4
Balanced 10.4 8.3 10.5 10.0 7.9
Objective (CPI + 3.0%) 5.1 4.7 4.9 4.9 5.1
Outperformance 5.3 3.6 5.6 5.1 2.8
Conservative 6.2 5.6 7.0 7.5 7.3
Objective (CPI + 1.5%) 3.6 3.2 3.4 3.4 3.6
Outperformance 2.6 2.4 3.6 4.1 3.7
Cash 1.6 1.8 2.0 2.5 3.0
Objective (Bloomberg AusBond Bank Bill Index) after fees 1.6 1.8 2.0 2.6 3.2
Outperformance 0.0 0.0 0.0 -0.1 -0.2
Inflation CPI 2.1 1.7 1.9 1.9 2.1

TTR Pension
Year ended 30 June 3 year compound 5 year compound 7 year compound 10 year compound
One year % average % p.a. average % p.a. average % p.a. average % p.a.
All Growth 11.6 9.5 12.2 11.2 7.8
Objective (CPI + 3.5%) 5.6 5.2 5.4 5.4 5.6
Outperformance 6.0 4.3 6.8 5.8 2.2
Balanced 9.1 7.9 10.2 9.8 7.8
Objective (CPI + 3.0%) 5.1 4.7 4.9 4.9 5.1
Outperformance 4.0 3.2 5.3 4.9 2.7
Conservative 5.4 5.3 6.9 7.3 7.2
Objective (CPI + 1.5%) 3.6 3.2  3.4 3.4 3.6
Outperformance 1.8 2.1 3.5 3.9 3.6
Cash 1.4 1.7 2.0 2.5 3.0
Objective (Bloomberg AusBond Bank Bill Index) after fees 1.6 1.8 2.0 2.6 3.2
Outperformance -0.2 -0.1 0.0 -0.1 -0.2
Inflation CPI 2.1 1.7 1.9 1.9 2.1
Chant West Super 2018 Pension 2018

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