Superannuation fund leaders looking to a bright future
Australia’s largest superannuation fund, AustralianSuper, is expecting to manage $1 trillion in 10 years’ time, chief executive Paul Schroder says.
Australia’s largest superannuation fund, AustralianSuper, is expecting to manage $1 trillion in 10 years’ time, chief executive Paul Schroder says.
Interviewed for The Australian’s CEO Survey 2025, Mr Schroder predicts that the fund, which has $350bn in assets under management, will push through the $400bn mark in 2025.
Its rising assets are expected to come as the $3.9 trillion superannuation sector continues to expand off the back of strong investment returns and the increase in the superannuation guarantee levels.
The superannuation giant, the 16th-largest pension fund in the world, makes up almost 10 per cent of the total assets in the total Australian superannuation sector and more than 25 per cent of the assets of the $1.37bn industry superannuation sector.
Mr Schroder says the fund is expecting its membership, now more than 3.4 million, to grow to 3.5 million next year – more than 14 per cent of all super fund members in Australia and about 25 per cent of total industry fund membership. By 2035 it expects membership to be five million.
The industry superannuation sector has continued to grow as a result of strong investment performance, and the impact of the increasing superannuation guarantee which is set to increase to 12 per cent on July 1 from the current level of 11.5 per cent.
AustralianSuper continues to dominate the industry super fund sector, ahead of the $300bn Australian Retirement Trust, formed in 2022 from the merger of QSuper and Sunsuper, which has 2.4 million members. Mr Schroder said the fund was able to “leverage its size and scale” to get a better deal for its members.
The fund, which manages the investment of 60 per cent of its assets in-house, is planning to expand this to about 75 per cent by 2030 as its assets grow.
It has offices in New York and London where it is continuing to build out its investment capabilities. “We are helping a cleaner in Brisbane invest like a billionaire in New York,” Mr Schroder said.
He said the average retirement balance of its members, which was around $356,600 in 2018, would more than double to $783,000 in 10 years’ time.
Mr Schroder said artificial intelligence and other technologies would play a “pivotal role” in helping the fund meet its expected growth, including delivering efficiency, improving member experience and enhancing risk management. AI was a “central part” of its strategy of increasing its engagement with members.
AustralianSuper had “embraced generative AI” as part of its technological transformation, Mr Schroder said. “We have seen material improvements in productivity and risk management where teams are fully operating either machine learning or generative AI,” he said.
Deanne Stewart, chief executive of the $185bn Aware superannuation fund, said her fund was “continuing to see strong growth” in its funds under management.
She said the fund was “particularly excited” about the investment opportunities” in energy transition. “This will likely be the single largest investment opportunity we see in our lifetime, as the global economy is reshaped for a low carbon future.”
Ms Stewart said Aware was expecting to make some more direct investment in infrastructure and property. Aware recently invested in Octopus Energy in the UK.
Aware also saw a “strong pipeline of opportunities” in digitisation and the digital economy.
“We’ve seen enormous changes in the use of data in our daily lives and this has driven increasing demand for the infrastructure and technology to support this,” she said. “We can see access points across the asset class spectrum and we’re excited about the returns these can bring to the overall portfolio.”
Ms Stewart said Aware had 150 investment professionals “scouring the globe for the best investment ideas”. “As a long-term investor we are able to look through the cycle to provide capital to sectors temporarily out of favour, and support good businesses as a reliable lender and engaged shareholder,” she said.
Debby Blakey, chief executive of the $90bn health and community service sector super fund HESTA, said the fund had about 16 per cent of its portfolio managed in-house. The fund was also continuing to develop its digital advice offering, primarily based around helping members with their transition to retirement.
“With 14 per cent of our more than one million members expected to retire in the next five years, we see an incredible opportunity for more of our members to benefit from well-targeted expert help and guidance to help them face the future with confidence,” she said.
“Future Planner, our digital help and education platform, is an example of how we’re investing in technology to help members build their financial confidence around planning for retirement.”
Ms Blakey said members who received financial advice from the fund reported that they felt more confident about their financial situation.
More Coverage
Supermarket suppliers’ council chief shown the door
Mystery surrounds the immediate exit of Tanya Barden as chief of the Australian Food and Grocery Council, leaving the peak body representing supermarket suppliers without a leader.
Logistics legend saw women change sector
The changing role of women in the workforce in Australia has driven major structural shifts in the logistics business, according to Michael Byrne, the former chief executive of Linfox and Toll.