Australia’s pension market hit $3.5 trillion at the end of the March quarter 2023, buoyed by a rebound in financial markets and the increase in the Superannuation Guarantee (SG). 

According to APRA data released on Tuesday, Australia’s pension pool grew 1.1 per cent in the March 2023 quarter due to global markets rallying.

The SG moved to 10.5 per cent last year as part of legislated annual increases that will max out at 12 per cent by the 2026 financial year. 

APRA-regulated assets grew 2.7 per cent to $2.4 trillion from the $2.33 trillion in the previous corresponding quarter. Of this pool of assets, default MySuper investment products jumped 4.3 percent to $964.5 billion, while SMSF assets fell 2.6 per cent to $889.5 billion.   

This latest quarterly data shows the asset pool in Australia has grown considerably and is larger than the country’s $2 trillion-plus economy. The ever-expanding asset base is pushing larger funds such as AustralianSuper and Aware Super to set up overseas teams to invest directly offshore. This international push is driven in part by the smaller scale of assets available domestically and the quest to cut fees paid to third party asset managers.   

However, the strategy comes with considerable risks to cost and culture said Cbus acting CIO Brett Chatfield in a recent interview with Investment Magazine.  

“We think there’s quite a bit of risk [in terms of] having the right culture, attracting the right people, and all the risk, compliance and licensing issues to be considered [in having an offshore office] versus the potential benefit which would be derived at our size,” he said.  

 

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