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CWU T&S FACT SHEET

Index to Fact Sheets
Updated 24 June 2020

SUPERANNUATION ANALYSIS - COVID19

SUPERANNUATION - ACCUMULATION FUNDS

IMPORTANT NOTE

This article presents historical figures based on one account in one fund. It may not be typical. It is presented for discussion and hopefully a better understanding of superannuation funds.

At the time of writing the future was most uncertain. We were to face a possible second wage in Covid19, a very poor reporting season, and most of all fluctuating investor sentiments. Shares could dive dramatically, not slowly rise.

We do not give advice.

INTRODUCTION

Nearly all members will have a part or a full superannuation accumulation fund. (Many will also have a defined benefit fund.) This deals with the performance of accumulation funds.

Note that the accumulation fund performance will depend on the strategy to allocation funds. A common term is "balanced". This, generally speaking, means an equal spread between shares, property and cash.

Below we have tracked an actual accumulation fund. This may be of interest as it covers the GFC crash in 2008 and the recovery, and the recent Covid19 crash.

Here is a question to consider. The fund still exists. What has been lost?

The original investment was $100,000. It has more than doubled.

Part of the answer - nothing - yet. There were paper losses. But there were recoveries.

The measure of loss of profit can only occur when you take the money out. If you take money out now, it will be less that it was at the peak just before the Covid crash in February/March 2020.

Here some important notes:

  • This is tracking a real fund
  • The numbers have been rescaled to start at $100,000
  • No contributions were made since 2008
  • No monies were withdrawn
  • The increases are purely based on fund performance
  • In earlier years the bias was to a balanced fund.
  • In later years the bias was towards shares and away from cash
  • The fund was one of the major industry (union backed) funds.

    Performance each year since May 2008 and covering the GFC 

    May 2008	$100,000 	100%     just before GFC
Jan 2009	$ 85,023 	 85%	
Jan 2010	$ 98,960 	 99%	
Jan 2011	$106,361 	106%
Jan 2012	$103,534 	104%
Jan 2013	$115,373 	115%
Jan 2014	$136,678 	137%
Jan 2015	$147,436 	147%
Jan 2016	$154,041 	154%
Jan 2017	$175,093 	175%
Jan 2018	$201,245 	201%
Jan 2019	$204,421 	204%
Jan 2020	$239,117 	239%
Jun 2020	$222,521	223%     Covid
    Observations:
  • The performance is unpredictable
  • Returns can vary wildly
  • Following the GFC, it took about 18 months to recover

    Performance this financial year (to 20 June 2020) 

    20/06/19	$223,370			223%
20/06/20	$222,505 	-$   865	223%
    Observations:
  • The fund is where it was at the beginning of the financial year.
  • The return for the year is 0%, despite Covid19

    Performance after 2008 GFC 

    20/05/08	$100,000 	100%    May 2008
30/06/08	$ 94,686 	 95%    GFC
31/08/08	$ 99,371 	 99%    GFC
22/10/08	$ 91,772 	 92%    GFC
01/01/09	$ 85,023 	 85%    GFC
07/03/09	$ 82,298 	 82%    GFC
01/05/09	$ 98,760 	 99%
29/05/09	$ 91,379 	 91%
20/01/10	$ 98,960 	 99%
    Observations:
  • Following the GFC, it took about 18 months to recover
  • The worst result showed a paper loss of 15%
  • Without the GFC, the return for the year might have exceeded 15%
  • The return for the year is 0%, despite Covid19

    Performance from Covid in 2020 

    20/01/20	$239,117 	100%
20/02/20	$242,881 	101%	+$ 3,764
24/03/20	$204,033 	 85%	-$38,848    Covid19
24/04/20	$211,589 	 88%	+$ 7,557
20/05/20	$215,495 	 90%	+$ 3,905
20/06/20	$222,521 	 93%	+$ 7,027
Loss since 
20/01/20	$ 16,969	  7%
    Observations:
  • The worst result showed a paper loss of 15%
  • The current loss, after 5 months is 7%
  • See the important note above

    What if I withdraw $10,000?

    The Government is allowing the withdrawal of two lots of $10,000 during Covid19. How would that affect my super? We can give some indication by simulating a withdrawal during the GFC. The table below gives two scenarios.

    First scenario:
    We amend the investment by taking out $10,000 just before the GFC in 2008.
    The result is that there will be $22,251 less money following Covid 19. Note that just before Covid19, the loss was $24,287.

    Second scenario:
    We amend the investment by taking out $10,000 during the GFC in 2009.
    The result is that there will be $27,038 less money following Covid 19. Note that just before Covid19, the loss was $29.511.

    The point here is that money taken out at the bottom of the market has a much bigger effect compared to a withdrawal at the bottom of the market. 

    Date	 Actual       10k out before GFC     10K out during GFC
         Amount       New Amt   Loss	     New Amt   Loss       
May-08   $100,000     $ 90,000  $10,000      $100,000  $0      
Jun-08   $ 94,686     $ 85,218  $ 9,468      $ 94,687  $0      
Aug-08   $ 99,371     $ 89,434  $ 9,937      $ 99,371  $0      
Oct-08   $ 91,772     $ 82,595  $ 9,177      $ 91,772  $0      
Jan-09   $ 85,023     $ 76,521  $ 8,502      $ 85,024  $0      
Mar-09   $ 82,298     $ 74,068  $ 8,229      $ 72,298  $10,000 
May-09   $ 98,760     $ 88,885  $ 9,876      $ 86,760  $12,000 
Jan-10   $ 98,960     $ 89,064  $ 9,896      $ 86,936  $12,024 
Dec-11   $106,361     $ 95,726  $10,636      $ 93,438  $12,923 
Jan-12   $103,534     $ 93,181  $10,353      $ 90,954  $12,580 
Jan-13   $115,373     $103,836  $11,537      $101,354  $14,018 
Jan-14   $136,678     $123,011  $13,667      $120,071  $16,607 
Jan-15   $147,436     $132,693  $14,743      $129,522  $17,914 
Jan-16   $154,041     $138,637  $15,403      $135,324  $18,717 
Jan-17   $175,093     $157,585  $17,509      $153,819  $21,275 
Jan-18   $201,245     $181,121  $20,124      $176,793  $24,452 
Jan-19   $204,421     $183,979  $20,441      $179,582  $24,838 
Jan-20   $239,117     $215,206  $23,911      $210,063  $29,054 
Feb-20   $242,881     $218,594  $24,287      $213,370  $29,511 
Mar-20   $204,033     $183,630  $20,402      $179,242  $24,791 
Apr-20   $211,589     $190,431  $21,158      $185,880  $25,709 
May-20   $215,495     $193,946  $21,549      $189,311  $26,184 
Jun-20   $222,521     $200,270  $22,251      $195,484  $27,038

    VIP - CONTACTING US
    Please note the following changes as we simplify our phone numbers
    0428 942 878 dan.dwyer@cwunion.net Dan Dwyer Secretary/Lawyer - for industrial matters & advice
    0447 365 433 reception@cwunion.net Administrative eg payments, applications, change of details

    Authorised by Dan Dwyer Branch Secretary
    CWU Telecommunications & Services Branch, Sydney City, NSW.


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