Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Industry marks progress as well as growth
(Pictured: John Brogden)
The best speeches of politicians are often their last. They can afford to be reflective and, even, honest. John Brogden, the former NSW Liberal Party Leader, delivered his fifth and final speech to the Financial Services Council conference last Thursday, before his departure from the CEO role next January.
In the speech, Brogden canvassed the many challenges still facing the funds management and superannuation industry, but armed with some new research he also painted a picture of steady improvement and growth in many areas, such as reducing fees and obtaining strong average after-costs returns.
Brogden concluded his speech: “When reflecting on the Australian superannuation system, I often think of Winston Churchill’s opinion that, ‘It has been said that democracy is the worst form of government except for all the others we have tried.’ We have the worst private pension system in the world – except for all the others!
“When evaluating our superannuation system it is critical to remember that it is only 22 years old. It might be $1.8 trillion, growing to $3 trillion by 2020 and $5 trillion by 2030, but at present it only provides a total retirement income for around 10 per cent of retirees.”
One of the reports published at the conference was an after-fee returns comparison between the Australian industry and other comparable pension markets. The report, prepared for the FSC by Deloitte Access Economics, showed Australian super fund returns at third highest of 12 countries over two five-year periods, between 2000-2005 and 2008-2012.
Showing the dangers of drawing too much from cross-border data, Australia came in second after Chile in the first period but ninth (out of the nine countries for which figures were available) in the second period. Much of the difference has to do with the behavior of the Australian share market. Australia had the highest exposure to shares of all the markets surveyed and the highest proportion of defined contribution, rather than defined benefit, funds.
