13 November, 2007
Allianz Global Investors (AllianzGI), one of the world's largest active asset management companies, has published Asia-Pacific Pensions 2007: Systems and Markets, a major study of superannuation/pension markets in nine1 developed and emerging Asia-Pacific economies.
For the Asia-Pacific region as a whole, the study finds that superannuation assets are expected to increase by a 9.2% compound annual growth rate, more than doubling assets under management to AU$5.2 trillion by 2015 from AU$2.4 trillion in 2006.
According to Nicholas Scofield, General Manager Corporate Affairs, at Allianz Australia, “the AllianzGI study predicts that, out of the included Asia-Pacific economies, Australia will have the greatest absolute growth in superannuation assets over the next decade, which are estimated to more than double, from around AU$1 trillion in 2006 to AU$2.5 trillion in 2015.”
“Even with the rapid growth of superannuation assets over the next decade in emerging Asia-Pacific countries, Australia’s share of regional superannuation assets will grow from around 43% in 2006 to 48% in 2015”, Mr Scofield said.
Find out more about 9 Asia Pacific pension markets at a glance.
Changing macroeconomic and demographic conditions play an important role in the growth in superannuation assets
Allianz Global Investors expects Australia’s solid economic growth to continue in the medium term, with annual GDP growth averaging 3.5% over the period 2009-2015. The report also expects Australia’s potential labour force (ie the 15-64 age bracket) to grow by 12% over the period 2005 to 2025, with immigration continuing to play an important role. This compares with other more developed Asia-Pacific countries where the labour force is expected to decline, for example, by 15% in Japan, 3% in South Korea and 1.5% in Taiwan. The potential labour force in the emerging economies will grow, in some instances substantially, for example, by 40% in India.
Mr Scofield said, “the demographic trends in the region are particularly interesting. While most Asia-Pacific economies - particularly the emerging countries - will see their potential labour force grow over the period 2005 to 2025, in the period 2025 to 2050, only Australia’s and India’s labour force is predicted to continue to grow. For example, Japan’s, South Korea’s and Taiwan’s labour forces are all predicted to decline by around 30% between 2025 and 2050, and even China’s falls by more than 10%.”
As expected, the changes in potential labour forces are related to population change. Australia’s and India’s populations are estimated to grow the most strongly over the period 2005 to 2050, by around 38% and 45%, respectively. On the other hand, South Korea’sand Taiwan’s population is expected to fall by more than 10% over the period, and Japan’s by more than 20%.
Superannuation/pension scheme reform pressure in Asia
To understand the necessity for reform and the ability of existing pension systems to cope with demographic change, Allianz Dresdner Economic Research developed the Allianz Pension Reform Pressure Gauge. This indicator measures pressure on governments to reform their pension systems by examining various dimensions of systems in a consistent manner. Reform pressure mainly arises from two sources: demographic change and/or underdeveloped or unsustainable pension systems. It therefore allows cross-national comparisons by measuring the sustainability of pension systems and the resulting need to reform them. The Allianz Pension Reform Pressure Gauge ranks countries on a scale from 1 (low reform pressure) to 10 (high reform pressure).
“The Allianz Pension Reform Pressure Gauge shows that the pressure for reform differs considerably from country to country. The Allianz Pension Reform Pressure Gauge shows Australia is the Asia-Pacific country with the smallest necessity to reform its system, with a score of 2. In this regard, Australia compares favorably with other Asia-Pacific economies, with most scoring significantly higher, for example, Taiwan and Singapore (4), South Korea (>4), Japan (>5), China and Thailand (>6) and India (>7)”, Mr Scofield said.
Concluding, Mr Scofield said, “besides India, Australia is the only country covered in the AllianzGI study for which demography does not pose a severe problem to the sustainability of its superannuation/pension system, as net immigration helps ensure that the population ages slowly. The study also noted that the Australian superannuation system is often considered a role model not only for Asia, but for other countries around the world as well. Thanks to our well-established mandatory occupational component, Australia has one of the most developed superannuation/pension markets worldwide.”
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About Allianz Global Investors
Allianz Global Investors AG (AllianzGI), a subsidiary of Allianz SE, is a management holding company for a network of investment specialists in the most important institutional and retail markets around the world. Through PIMCO, RCM, Oppenheimer Capital, NFJ, Nicholas-Applegate and several other specialist firms AllianzGI offers its clients a broad variety of investment competencies, covering all equity and fixed income investment styles as well as balanced products and alternative investments. With 971 billion Euro Assets under Management (2006), AllianzGI ranks amongst the top investment management companies worldwide. Through its network of more than 4500 employees around the globe, including more than 900 investment professionals, AllianzGI is able to leverage local expertise and market knowledge to its clients all over the world.
Allianz Global Investors says pension reform across Asia-Pacific region is driving dramatic growth in assets – success of DC plans is vital to cope with demographic problems.
About Allianz Australia
Best General Insurance Company 2006*
Best General Insurance Company 2007*
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The Allianz Australia Group operates in Australia and New Zealand. It is one of Australia’s largest general insurers, a leading private workers’ compensation insurer, and more recently, a life insurer.
Allianz Australia delivers a wide range of personal, commercial and corporate insurance products and services. AAL is proud to be of service to more than 2 million policy holders and over 50% of Australia’s top 200 BRW listed companies have some form of insurance cover with the group.
Allianz Australia has approximately 3300 staff. In 2006, the company achieved a gross written premium exceeding AU$2.4 billion and investment assets of approximately AU$5.5 billion. Allianz Australia Group is a wholly owned subsidiary of the worldwide Allianz Group, one of the world’s largest financial services companies.
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