Australia’s retirement funds deliver zero return over five years

For two decades, Australia’s retirement income policy has shifted investment risk onto individuals. But the numbers are sobering: the Australian sharemarket has delivered zero return over the past five years, blowing up many workers’ retirement plans.

How does Australia’s system work?

Australian employers must contribute 9% of salary as the “superannuation guarantee” — far above Hong Kong’s 5% MPF rate. Employees choose their own funds, and bear the investment risk themselves.

What’s the lesson of zero returns?

Five years of zero equity returns means retirement savings fully invested in shares went nowhere. For those nearing retirement, a market fall just before retiring can wipe out years of savings — underscoring the need to diversify and dial down risk with age.

What does it mean for Hong Kong MPF members?

MPF is also a defined-contribution system: members carry the investment risk. Review your portfolio regularly — take more risk when young, and shift gradually to conservative assets as retirement nears, so a late market slump can’t do major damage.

Why do default funds matter?

Australia’s experience shows many members leave the choice to the default fund. A well-designed default (like Hong Kong’s Default Investment Strategy) that auto-adjusts risk with age is a vital safeguard for disengaged members.

Compare long-term fund performance at MPF fund comparison.