Australia’s superannuation funds have surpassed A$4 trillion ($2.6 trillion) in assets as the increasingly global investors rake in billions of dollars of inflows from compulsory contributions.
The sector grew 13.4% in the year through September, with total assets now standing at A$4.1 trillion, according to Australian Prudential Regulation Authority data released Nov. 27. Overall contributions jumped 13.1% in the period to A$191 billion.
The country’s super funds are benefiting from mandatory employer payments that have increased for the past three decades, and are currently worth the equivalent of 11.5% of workers’ salaries. Assets are forecast to more than triple by 2048, according to a Mercer report, with a dozen mega-funds controlling more than A$100 billion each by 2028.
The International Monetary Fund last month warned the rapid growth of unlisted investments throughout Australia’s pensions industry was a potential threat to the country’s financial stability. It cited members’ ability to easily switch funds as a liquidity risk, especially as private assets comprise more than 20% of holdings on average.
In September, the Reserve Bank of Australia said the superannuation system had the potential to amplify shocks in the financial system. The RBA cited the example of funds selling large amounts of debt securities back to issuers during the pandemic, driving up funding costs.
APRA regulates around A$2.8 billion of the superannuation industry’s assets, while self-managed funds are worth around A$1 trillion.
