Two of Australia’s largest pension funds moved a step closer to creating a A$200 billion ($155 billion) giant as the world’s fourth-biggest pension pot consolidates.
QSuper and Sunsuper Pty. have signed a deal to merge, the two funds said in a joint statement Monday. The Brisbane-based funds will combine by September to create the country’s second-largest pension fund.
QSuper has about A$120 billion in funds under administration and looks after the retirement savings for Queensland state government employees. Sunsuper has about A$80 billion in savings for employees of corporations including Unilever Plc and Virgin Australia.
As interest-rate jitters supercharged a meltdown in the world’s biggest bond market, Sam Sicilia barely blinked.
“The markets are wrong” about inflation expectations, said Sicilia, chief investment officer of the A$56 billion ($43 billion) Host-Plus Pty pension fund in Melbourne. “Deflationary forces are bigger. Interest rates are going to stay at effectively zero.”
With governments around the globe still adding to trillions of dollars of stimulus to ride out the pandemic, pension fund managers who are trying to discern the long-term effects are posing the question: Will inflation make a comeback? If it does, more than $46 trillion of global pension assets would be affected as central banks pivoted toward sustained higher interest rates.
Shuttering failing Australian pension funds and stopping new accounts being opened when changing jobs will add almost A$100,000 ($77,160) to the retirement savings of young workers.
Minister for Superannuation Jane Hume is shepherding new laws through Australia’s parliament to revamp the industry to weed out under-performing funds and make pension accounts automatically follow workers when they change employers.
It’s designed to protect the retirement savings of the most disengaged Australians — one-in-five of whom have never contacted their fund. Hume estimates that a young person going into a super fund for the first time will be around A$98,000 better off at retirement after the reforms.
Author(s): Matthew Burgess, Shery Ahn, and Paul Allen