How Australian super funds shone before COVID-19 and early release

New global survey data has revealed just how healthy the Australian superannuation funds sector was before the onset of the COVID-19 pandemic, with Australian pension funds significantly outstripping the growth of their international peers. 

The global survey, conducted by the Willis Towers Watson Thinking Ahead Institute, showed that to assets under management within the world’s 300 largest pension funds increased by 8% while those of the Australian funds covered in the exercise increased by 19.2%. 

Just as importantly, one of the fastest-movers among the Australian funds identified by the research was HostPlus which has been one of the funds hardest hit by the COVID-19 pandemic and the Government’s hardship superannuation early release regime. 

The data, released late yesterday, revealed that assets under management (AUM) at the world’s 300 largest pension funds increased in value by 8.0% to a total of US$19.5 trillion ($26.8 trillion) in 2019, in contrast to the 0.4% decline the year before. 

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According to the research, the compound annual growth rate of the top 20 funds during the past five years was 5.5%, compared to 4.9% for the top 300 funds during the same period.  

Commenting on the findings, Willis Towers Watson Australia director, investments, Martin Goss said the report showed while total assets globally grew by 8.1%, the Australian funds in the survey grew at 19.2% for the year, with funds rising an average of 13 places. 

He said this performance had been aided by relatively high allocations to growth assets and net positive cash flow, as many funds remained in a growth phase. 

The biggest Australian movers in the top 300 list were HOSTPLUS, rising 46 places and recording 40% growth, AustralianSuper, which was the highest Australian fund on the list gaining 10 places and growing by 29% and Sunsuper which also recorded 29% growth, rising 12 spots. 

Co-founder of the Thinking Ahead Institute, Roger Urwin said: “Overall, the world’s largest pension funds staged a strong rebound in growth in 2019, following a tough market environment the year before”.  

“However, this positive result does not detract from the multiple pressures currently facing pension funds, from concerns around solvency levels to rising expectations with regards to ESG considerations, particularly concerning climate and social issues.  

“Perhaps most notably of course, we are still witnessing ramifications from the COVID-19 crisis and, as we anticipate further economic uncertainty in the months ahead, these challenges make pension fund boards’ agendas more complex and stressed than at any previous time.”