Australia has been the fastest growing pension market for the last 10 years, achieving excess growth of around 40 per cent compared to other large pension markets globally.
Research from Willis Towers Watson’s Thinking Ahead Institute also found that global pension fund assets were close to double their size of 10 years ago. The latter however, were down 3.3 per cent in the past year. The United States remained the world’s largest pension market, accounting for 61.5 per cent of worldwide pension assets, followed by Japan with 7.7 per cent and the United Kingdom with 7.1 per cent.
Alternative asset allocations in the seven markets grew by 20 per cent in aggregate in the last 20 years, which was funded by a corresponding 20 per cent decrease to 40 per cent in equities allocations.
Furthermore, defined contribution assets now account for over 50 per cent of total assets across the seven markets for the first time. This continued a trend of defined contributions growing faster than defined benefits over the last 10 years, with assets in each growing by 8.9 and 4.6 respectively over the period.
“While defined contribution assets have surpassed 50 per cent for the first time, it is 86 per cent in Australia and the highest of this group by a considerable margin. Australia also holds a bigger element in cash, which takes into account the impact of SMSFs,” Willis Towers Watson senior investment consultant, Paul Newfield, said.