Virus Turmoil Wipes Out Year’s Growth for Australia Pensions

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Global market turmoil caused by the coronavirus has wiped out a year’s growth for Australia’s pensions industry, the world’s fourth-biggest pot of retirement savings.

Assets under management fell 7.7% to A$2.73 trillion ($1.8 trillion) in the three months to March 31, back to almost the same level it was a year ago, Australian Prudential Regulation Authority data published Tuesday showed. That’s a marked turnaround for an industry that’s used to exponential growth, with 9.5% of a worker’s gross salary paid into a retirement fund each month.

The drop came as funds sold stocks and boosted cash holdings in preparation to pay out billions of dollars to members allowed to access their retirement savings early under the government’s emergency response to the virus. APRA regulated pension funds suffered A$210.7 billion of investment losses during the period, which saw equity markets from Sydney to Hong Kong and London tumble.

19,056 in U.S.Most new cases today

-13% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​062 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

-4.​8% Global GDP Tracker (annualized), April

$31 Billion Threaten Australian Pension Returns" target="_blank">Withdrawals of $31 Billion Threaten Australian Pension Returns

Despite a recovery in markets in April, the savings system is set for more falls as rising unemployment crimps the level of mandatory payments into pension funds. Funds have also paid out more than A$10 billion inearly access requests, with more expected.

Here’s a breakdown of asset allocation, according to fund types:

Fund Type1Q 2020 Cash4Q 2019 Cash1Q Equity4Q Equity
Industry Funds13%8%48%53%
Public Sector Funds14%11%43%46%
For-Profit Funds14%11%52%55%

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