Australia’s collective retirement nest eggs will become the second largest in the world in less six years, according to new analysis.
Super Members Council (SMC) analysis projects Australian pension assets will surpass the UK in 2030 and Canada by 2031, to rise to second in the world, with the US remaining the largest.
Super Members Council CEO Misha Schubert said Australia had the fastest growing super system globally, increasing at twice the rate of international peers.
Ms Schubert said the SMC analysis showed between 2001–2023, Australia’s cumulative contribution inflows reached 180 percent of GDP, the highest among OECD countries and well above the OECD average level.
She said Australia was the only OECD country whose spending on its Age Pension system was projected to fall, dropping from 2.5 percent of GDP currently to two percent by 2060, with the average proportion of GDP spend on pensions across the OECD at 9.3 percent.
“Australia has the 55th highest population but the fourth largest pool of pension assets – currently behind the UK, Canada and the US.”
Ms Schubert said funds under management in Australia were currently $4.1 trillion, exceeding any single Sovereign Wealth Fund, including Norway ($2.8 trillion) and China ($2.1 trillion).
She said the scale of Australia’s international investment pool had also strengthened Australia’s global influence and security by deepening our economic and trade links with key global players.
“Having one of the largest reliable pools of long-term stable capital creates new opportunities for investments to deliver strong returns for the retirement nest eggs of Australians.”
Ms Schubert said the compulsory and universal nature of Australia’s system, combined with strong preservation rules, had given Australia’s system the strongest net cashflow position globally, with around $3.14 billion in contributions invested each week.
“Three key policy settings have made Australia’s super system one of the biggest and most effective internationally and underpin its long-term success,” she said.
“Because super is universal, compulsory, and preserved until our retirements, total system contributions are projected to reach $141 billion for the financial year 2024-25.”
“These safeguards – especially that people’s investments are preserved until retirement – are the secret sauce of super, giving Australians in their millions the power of compound returns over decades.”
