Australia-Taiwan Pension Reform Seminar, 2022 International Asset Management Forum
Remarks by Australian Representative Jenny Bloomfield
8 June 2022
I am very pleased to welcome you to this Australia-Taiwan Pension Reform seminar, part of the 2022 International Asset Management Forum. I would like to thank Taiwan’s Securities Investment Trust and Consulting Association for co-hosting this event.
Over the past decades, Australia’s financial services sector has evolved from being relatively closed and inward looking, to what is now one of the most open, dynamic and globally competitive markets in the world.
In this, Australia’s superannuation system, our retirement income system, has played a transformational role.
The way Australians prepare for retirement has been transformed by the introduction of compulsory superannuation, which, alongside voluntary contributions and a means-tested age pension, forms Australia’s ‘three-pillar’ system – a system endorsed by the World Bank as international best practice.
Superannuation is more than an integral part of Australia’s financial system – it is a national institution. Today, 16 million Australians collectively own $3.5 trillion dollars in superannuation – that’s substantially more than the value of all companies listed on the Australian Stock Exchange; indeed, one in every ten dollars earned by Australians is now saved for retirement.
Australia’s pension system is now the world’s fourth largest, and our superannuation assets have also achieved one of the highest growth rates of pension fund assets in the world, averaging a compound annual growth rate of over 11 percent for the last 20 years. Australian pension assets now stand at 172 per cent of our GDP (2021) – second highest among the world’s 22 major pension markets.
Compulsory superannuation allows people to achieve a retirement income that better reflects their pre-retirement income. Employees choose a superannuation fund for themselves, into which employers make compulsory contributions (currently 10 per cent of employees’ wages). Employees are also encouraged to make additional voluntary contributions, for which tax concessions are available; and the means-tested age pension further ensures that Australians achieve a minimum standard of living in retirement, in line with community standards.
The growth of our superannuation system has also supported Australia’s strong managed funds industry – now ranked the fifth largest managed funds system in the world, with $2.5 trillion in consolidated assets under management, and around five percent of that contributed by overseas investors.
The regulatory framework for managed funds in Australia is robust and mature, striking a good balance between consumer protection and facilitating industry growth.
Australia is also part of the Asia Region Funds Passports initiative - a multilateral framework aiming to develop an Asia-Pacific managed funds industry through efficient market access and regulatory harmonisation, which will further expand investment opportunities for consumers, and growth in the funds industry in each of the member jurisdictions.
And as our population ages, we – government and industry – continue to work together to ensure our high-quality retirement system can deliver to its full potential – with more innovation and competition in the market for retirement income products, and more choice based on individual circumstances and informed decision-making.
Australia and Taiwan are close partners, each with our own significant economic and financial strengths. As Taiwan seeks to reform its pension system, there are valuable lessons and experiences that we can share with each other. We look forward to deepening exchanges, and to taking advantage of the significant investment opportunities.
Thank you, and I wish you a successful event.