How super works - graph

Written: 27 November 2020

Nambawan Super members may not have stopped to consider that their Superannuation is a Long Term Investment. When you are working, you and your employer make small, regular contributions to your super, and Nambawan Super pools all the contributions and invests them, so that the contribution made today is worth more in the future.

Because most people work and contribute to super for 30-40 years, superannuation is a long-term investment. Our investment team thinks about how to invest to ensure strong long term returns.

 Each year, Nambawan Super declares an amount of interest to be credited to member accounts. The crediting rate changes year to year based on how well investments have performed during the year. Local and global economic conditions impact how much interest can be paid. Superannuation returns generally go down if economic conditions are poor.

But a year or two with lower returns should not worry members – as super is a long-term investment that members contribute to over their whole working life. There will be high returns when economic conditions pick up. So, in the long term the average crediting rate evens out and members’ savings continue to grow.

 The Coronavirus pandemic has resulted in the biggest global economic downturn in 100 years.  Nambawan Super can’t control the economy – but what we can control is how we respond to economic return to protect members’ savings in the best and the worst of times.

 Over the past 10 years, our members’ returns have averaged 7.4% per year. To achieve this success, the Fund has had to work harder in tougher years to minimise losses and seized every opportunity to recover, grow, and be profitable in good years. In 2011 for instance, Nambawan Super experienced a low return of only 2%, followed by an achievement of 11% in the two years that followed.

 Should members expect a low return in 2020? Is it too early to call? Given the tough local and global economic conditions, members should prepare for a lower return this year. Nambawan Super will continue working hard to minimise losses and capture any profit we can.

 Remember Super is for the long term. Nambawan Super provides the best options for our members to save a little more now, for a lot more later to ensure they can have a comfortable retirement.

Read more in our November edition of Nambawan SuperTok newsletter.

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