Despite the strong result, Challenger chairman of retirement income Jeremy Cooper said that retirees would be unlikely to see any boost in their fund balances.

“Strong investment returns in 2013 may be good news for super savers but more than a million Australian retirees are still likely to be in the red,” Mr Cooper said.

“A four year avenge of 8.8 per cent per annum after the Global Financial Crisis (GFC) is great if your money has been locked away but it’s just not enough if you’ve been using your super for its intended purpose of providing income in retirement.”

“Because they’ve been drawing income each year, retirees are earning this sort of return on a lower capital base after being hit by the GFC.”

“They are highly unlikely to ever recover their GFC capital losses,” he added.

Chant West said that the median growth fund reach 10.5 per cent above its pre-GFC high in 2013 and that the result shows “the importance of maintaining your strategy even in the most difficult times like the depth of the GFC. “

Mr Cooper said that 1.1 million Australians are drawing retirement income from account-based pensions which are super funds switched from accumulation to drawdown mode.

This means that in market downturns, retirees in account-based pensions have to deal with the eroding capital as well as the impact of the drawdowns they need to live on.

“I’m not advocating that investors try to time the market, but given the poor sequence of returns faced by retirees living on their super during the GFC, they may have been better off if they’d switched to defensive or conservative investment options beforehand to avoid the double whammy, said Mr Cooper.

“The vulnerability of retirees to volatility is the main reason why investing in retirement is different.”