Super funds shrink by $23 billion in 2008
Australian super funds have shrunk by 2 per cent in 2008 because of poorly performing share markets, according to the investment consultant Watson Wyatt.
Assets shrank by $23 billion in 2008, in contrast to a 10-year growth average of 12 per cent. Global pension balances also contracted by approximately 29 per cent in the face of badly performing equities.
“The striking deterioration of solvency levels around the world is testament to the hidden risk contained in the global system, emphasised by the speed and extent of the contagion. The global pensions system is being tested on every level,” said Martin Goss, the head of client consulting at Watson Wyatt.
Credit, collateral risk, liquidity and volatility were exacerbated by the underperformance of investment managers, Goss said.
He said that countries needed pension funds to grow relative to the size of their economy to meet the demographic crunch ahead, and called on governments to engineer bigger allocations to pensions. Super assets were worth 97 per cent at the end of 2008, from 119 per cent the previous year.
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