Interpac Business and Migration Solutions Melbourne Australia

The value of Australia's superannuation funds rose in 2009 following a rebound on world financial markets, lifting it to fifth place in a global pension assets rankings list.

The value of Australian super assets rose by around 9 per cent, or $88 billion, to a total $1.115 trillion at the end of 2009, according to a global study by financial consultant Towers Watson.

In US dollar terms, Australia rose to fifth place at $US996 billion ($1.12 trillion) from sixth in the group's 13-country global rankings, to be behind the US, Japan, the United Kingdom and Canada.

Overall, global pension assets across the 13 markets rose by 15 per cent to more than $US23 trillion, after falling by 21 per cent in 2008.

Towers Watson Australia senior investment consultant  Martin Goss while the improvement was welcome, the global economic downturn of 2008 and early 2009 had highlight the issue of how to deal with serious disruptions during times of highly changeable market conditions.

"While the recovery of markets will be welcomed, it is hoped that it will not stifle recognition of these as major issues for governments and companies to address," Mr Goss said. "I fear that without exceptional leadership we will have another tough decade in the pension and investment world."

Pension funds had to reassess their asset allocations due to the volatility on financial markets over the previous few years, Mr Goss said.

"During the crisis, some funds sold out of equities to address solvency issues, some drifted out of equities and into bonds by not rebalancing, while others maintained their strategic mix and rebalanced to prior equity percentages," he said.

"The result overall was a phase of de-risking, although often not in a measured way, and this has largely been reversed as equity markets have been rebounded and risk allocations rebuilt."

While growth in Australian superannuation assets in 2009 was slightly below its 10-year run rate of 10 per cent a year, only Brazil, Hong Kong and South Africa had higher growth rates in pension assets for the 1999-2009 period.

Mr Goss said fund investors were likely to focus on higher governance standards.

"This will become all the more important as pensions and financial services regulators seek to spell out what governance standards funds should adhere to and their broader responsibilities," he said.

"Funds in the past have had a very light touch applied on these issues, but the massive size and sphere of their influence make pension funds ripe for greater regulatory influence."

Financial Planning Association chief executive, Jo-Anne Bloch, said Australians need encouragement to boost their retirement savings.

"We have an ever-increasing and ageing population which will make more demands on the public purse," she said.

"The Treasurer (Wayne Swan) has concluded that we all need to start preparing for this sooner than later."

"A self-funded retirement is becoming more critical if Australians want to see their savings last an ever-increasing distance."

(Source from: TheAge)