Australian super fund assets rose to 103 per cent of the country’s GDP last year, compared with 93 per cent a year earlier, which boosted our ranking from fifth to fourth largest pension asset pool in the world.
According to the annual study of global pension assets by Towers Watson, Australia’s super assets comprised 4.8 per cent of the global pension market as at December, compared with only 1.7 per cent in 2001. Australia was the fastest-growing market of the major 13 countries in the study.
Interestingly, the Australian funds’ asset allocation was the second-most skewed to alternatives – 25 per cent, after Switzerland – and among the highest in equities at 49 per cent.
Graeme Miller, Towers Watson’s Australian director of investor services, said the Australian surge reflected a range of factors: the super guarantee, a strong economy compared with the rest of the world, the ‘Better Super’ changes implemented in 2007 and the strength of the Aussie dollar. The figures quoted in the study have all been converted to US dollars.
“While Australian funds’ asset allocation in equities remains high, we continue to see funds reducing their equity allocations in favour of alternative assets such as infrastructure and property,” Miller said. “We predict this trend to continue as strong contribution flows pour into Australian funds.”
Globally, institutional pension assets in the main 13 countries grew by 12 per cent last year, reaching US$26 trillion. The pool has risen by 66 per cent since 2000 when assets totaled US$16 trillion. The US remained by far the largest pension market, with US$15.265 trillion or 104 per cent of US GDP. It was followed by Japan, with $3.471 trillion (64 per cent), UK, with $2.279 trillion (101 per cent), Australia, with $1.261 trillion (103 per cent), Canada, with $1.140 trillion (73 per cent) and the Netherlands, with $1.032 trillion (134 per cent).