Australian pension funds fastest growing
Australia's biggest pension funds grew faster than the top global funds over the past five years, largely due to merger activity and strong contributions.
Australia's largest 14 superannuation funds as well as the Future Fund are all inside the top 300 pension funds globally by assets, and grew faster than the funds inside the top 300 of any other country over the five years to December 2011, according to the P&I/Towers Watson global 300 research, which was conducted in conjunction with US investment newspaper Pensions & Investments.
Mergers accelerated the upwards movement of the top funds by incorporating assets from outside the top 300 funds. Contributions were a stronger driver in Australia compared to overseas because of the relatively young state of the market.
More mature markets saw a heavier impact of outflows to retirees compared to Australia, according to Martin Goss, senior investment consultant at Towers Watson in Australia.
Markets performance was not a strong driver of growth and if anything proved a headwind in the five-year period considered in the report, with Australian equities shedding around 11 per cent in that time, Goss said.
Overall growth in assets for the 300 funds in 2011 was just under 2 per cent, down from 11 per cent in 2010, and was the lowest growth since 2003, aside from the13 per cent decline in 2008.
Total assets for the 300 funds reached US$12.7 trillion, with the 15 Australian funds combining for US$394 billion.
The top 300 pension funds now represent over 46 per cent of global pension fund assets, the research found.
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