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Australia reaps benefits of superannuation change
The Australian superannuation industry's evolution from a largely defined benefits environment to defined contributions has placed it at a distinct advantage to other nations now seeking to handle burgeoning deficits, according to new data released by Towers Watson.
Towers Watson Australia director of investment services Graeme Miller said governments and corporate sponsors of defined benefit funds through the developed world continued to face considerable challenges in dealing with deficits.
He said that in Australia, the impact of poor asset returns and falling bond yields had generally been passed from corporate and government balance sheets to individuals - a trend started in Australia with the inception of the Superannuation Guarantee in 1992, "and now other countries and organisations around the world are following suit".
The Towers Watson research pointed to the fact that Australian pension assets were among the developed world's fastest growing, with an annual growth rate of 17 per cent measured in US dollars over the past ten years.
It said the growth had been propelled by the strong Australian dollar, Australia's mandatory Superannuation Guarantee system, and investors' relatively high allocation to growth assets such as equities.
It said Australian funds continued to have the highest allocation to equities at 50 per cent.
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The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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