Rice Warner has released the preliminary results of its annual survey of superannuation funds and investment consultants – and it makes for grim reading for superannuation marketing departments.
The median respondent in 2015 reckons Australian equities will return 7.7 per cent per year in the long term – compared to 9.0 per cent in 2012.
Hedged international equities are expected to return 7.0 per cent per annum over the long term, down from 8.8 per cent a year three years ago.
The survey made similar findings about other asset classes, and it found industry participants also think volatility will rise over the coming years.
Rice Warner senior consultant Alun Stevens labelled the numbers in the survey as "sobering".
Record-low interest rates, declining growth in wealthy nations, low inflation and the knock-on effect of global quantitative easing have all hit long-term projections, Mr Stevens said.
"In blunt terms, [it means] 10-year return targets will most likely be missed over the next decade," Mr Stevens said.
"This ranks as perhaps one of the biggest public relations and member engagement issues facing the Australian superannuation industry since the GFC.
"How to tell fund members the bad news that long-term investment return targets are likely to be lower than the past, possibly even underperforming the targets set out in PDS documents?" Mr Stevens said.
Superannuation funds with members in their 50s and 60s have a tough job on their hands handling the expectations of Australians contemplating retiring in the next decade, he said.
