Super fund investments have been battered by inflation movements over the past half-decade, according to the latest assessment report issued over the weekend by superannuation analytic group Superratings.

As of the latest accounting, the yearly investment returns realised from the median balanced super fund sector reflected a measly average of about 0.92 percent seen by super fund managers over the last five years.

In an interview with The Herald Sun, Superratings chief executive Jeff Bresnahan stressed that the dwindling super fund returns have yet to include the so-called inflation impact, which when attached would easily erode the funds' worth by at least two percent in an annual basis.

"It's the worst five-year stretch we've ever seen and if things don't improve then returns over seven and 10 years will be hit too," Bresnahan was reported by the publication as saying in flagging an alarming situation for the super industry that was last projected to carry an overall domestic worth of $1.3 trillion.

He reminded too that super fund investments constitute some 80 percent of the whole industry, highlighting further the trend that gradually shrinks the fund and could eventually affect the retirement prospects of many Australians.

The past five years alone, according to the Superratings report, accounted for projected investment losses that could easily surpass the $100 billion mark, or a staggering annual retreats of $20 billion each year.

Bresnahan added that fund managers normally ensure that investments are able to collect returns with enough buffers for the likely onslaught of inflation yet for "the past five years the average super fund has failed to do this."

Since mandatory contribution was legislated in 1992, the balance super fund, according to Bresnahan, has been realising an average return of six percent and the "target for super funds is to produce returns equivalent to inflation plus about 3 per cent a year."

Notwithstanding the effects of the previous global financial crisis and the gloomy worldwide economic prospect, the Superratings report asserted that general goals for the super funds have been met so far.

"But if global markets don't rally soon then clearly it will hit our retirement funds and longer-term performance will be dragged down too," Bresnahan warned.