Australian pension assets grow despite pandemic

The COVID-19 pandemic and even the Government’s hardship early access superannuation regime failed to significantly slow the growth in Australian pension assets, according to new data released this week. 

The data, compiled as part of the Willis Towers Watson Thinking Ahead Institution Global Pension Assets Study, showed that Australian pension assets rose to 175% of gross domestic product (GDP) up from 151% a year earlier. 

Willis Towers Watson head of strategic advisory, Jessica Melville noted that this had occurred notwithstanding the $36 billion in outflows generated by superannuation early release. 

“While early release supported members in their time of need during the pandemic, Australian funds have shown considerable resilience and they will continue to play a significant role in the nation’s recovery,” she said. 

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The continuing growth in Australian pension fund assets was consistent with the global experience, with the WTW data revealing that despite the pandemic, assets rose to 11% to US$52.5 trillion ($67.4 trillion). 

According to the study, there was a significant rise in the ratio of pension assets to average GDP, up 11.2% to 80.0% at the end of 2020. 

It said this was the largest year-on-year rise since the study began in 1998, equalling the increase recorded in 2009 as pension assets bounced back after the global financial crisis. 

“Whilst the measure usually indicates a stronger pension system, the sharp rise also underlines the economic impact of the pandemic on many countries’ GDP,” it said. “Among the seven largest pension markets, the trend was even more pronounced with a 20% rise in the pension assets to GDP ratio to 147% in 2020, from 127% the year before.”