Australians are now leading the world in preparing financially for retirement, as revealed by a recent survey carried out by global asset consulting group Watson Wyatt.

Superannuation schemes now account for the vast majority of life insurance assets in Australia. The Watson Wyatt survey showed that fund assets have grown by 95% over the past 5 years, the fastest rate of growth among major financial markets. Australia now ranks sixth in the world in the overall size of its superannuation fund assets. 

In September 2005 the Australian Prudential Regulation Authority reported that there were $791.5 billion in superannuation fund assets, an increase of 6.7% on the previous quarter. The quarter to December 2005 saw a further increase of 6.9%.

Superannuation funds have now virtually replaced more traditional life insurance policies in Australia, and are especially popular due to the tax-benefits that these funds now offer to their members.

There are various types of superannuation funds, including employer or union-organised funds, retail funds established by private financial institutions, and Retirement Savings Accounts (RSAs), often used by part-time employees to top up their employee contributions. All types of funds experienced growth in the last quarter of 2005, industry funds leading with an 8.8% increase on the previous quarter.

Some financial experts are concerned about the high liability of the superannuation fund market, brought about by improved mortality rates and low bond yields over time. 2005 figures indicate, however, that balance sheets are improving, with assets now slightly outperforming liabilities.

Australia has been singled out as an example of good practice in the management of the superannuation fund market and in the education of fund members about their policies. The management of all Australian superannuation funds is overseen by the Australian Prudential Regulation Authority, which works in the interest of protecting fund members.