Superannuation funds are not meeting their long-term, consumer price index (CPI) plus objectives, research by SuperRatings has shown.
"CPI-plus objectives are probably more important now than ever before, given funds are struggling to meet their long-term objectives."
For funds that do articulate their CPI-plus objective, which is only 40 per cent of the market, the current picture doesn't look good, SuperRatings said.
"No balanced funds, where approximately 70 to 80 per cent of Australians have their retirement savings parked, [are] meeting their objective over three and five years, and very few meeting them over seven or 10-year periods," the firm said.
Partly this is the result of the fact that very few funds have altered their objectives in the last 15 years, despite the dramatic changes in the economic landscape, SuperRatings said.
"While performance targets in some cases of 5 per cent or more above CPI over five-year periods may have been appropriate during the heady days of the bull market prior to the GFC, the fact is that we are in a new paradigm."
"We have entered a lower return environment, with some calling it the 'new normal'."
The research firm said there was a greater focus on delivering 'consistent' returns rather than aiming for maximum performance.
"As such, funds need to reassess their objectives and question their assumptions about expected returns and their appropriateness over different timeframes," SuperRatings said.
The median balanced fund, defined as funds with between 60 and 76 per cent exposure to growth assets, fell 1.9 per cent in the 2011 calendar year, but the disparity between the best and worst performers was large.
The best performing balanced fund gained 3.3 per cent, while the worst performer lost 5.5 per cent.
"This result could have been worse if we consider the continued barrage of negative economic news, falling equity markets, a worsening European debt crisis and geopolitical events throughout the year."
