Research by Towers Watson has shown that Australia’s superannuation assets have grown by 14 per cent – the highest rate of the world’s 13 largest pension markets over the last 10 years.
According to the latest Towers Watson Global Pension Assets Study, Australia’s superannuation assets growth relative to GDP jumped from 96% in 2011 to 101% in 2012, joining the Netherlands, Switzerland, the UK and the US as countries where this ratio is higher than 100%. Australia can now lay claim to having the world’s fourth largest pension market valued at US$1.6 trillion.
Martin Goss, senior investment consultant at Towers Watson in Australia said that, “the Australian dominance of DC enables trustees to place priority on long-term risk-adjusted returns, whereas in countries with a greater bias to DB, matching liabilities is a greater priority, leading to lower equity and higher bond allocations, despite the historically low bond yields currently on offer.”
Goss confirmed that in 2013 equities showed their best calendar year of risk-adjusted return since the GFC and as a result pension funds in most markets were in the best shape they had been in for many years.
When put into perspective, given the extreme economic and market volatility, experienced during the past five years, Goss said that, “it was a relief for many pension funds to finish the year in better shape, for a change. While volatile markets are expected to continue for the foreseeable future, pension funds are now generally better equipped to deal with them.”