Australia and the U.K. have agreed on greater investment of superannuation and pension capital to secure more “two-way” investment in jobs and industries and to generate strong returns for investors from both nations.
The partnership will focus on policy dialogue, sharing expertise and reducing barriers to cross-border investment. It will also set up network-building to help facilitate investment opportunities that benefit members in both countries.
The MoU was signed by U.K. Chancellor of the Exchequer Rachel Reeves and Australia Treasurer Jim Chalmers on the sidelines of the meeting of G20 finance ministers and central bank governors in Washington.
“Australia and the United Kingdom share a longstanding economic partnership, and institutional investors in each market play a significant role in supporting economic growth,” Chalmers said in a statement. “More trade and investment between Australia and the U.K. is in the interest of both countries, and that’s what this MoU is all about. Its goal is to support an investment environment that helps superannuation and pension fund capital flow more easily in support of economic growth.”
The agreement is the second in recent months signed by Australia’s superannuation funds and pension funds in other countries: In March, an agreement was signed with a group of Canadian public pension funds to encourage similar bilateral investment. In the same month, super fund-owned infrastructure manager IFM highlighted a wide range of opportunities for super funds to invest in U.S. infrastructure.
Australia’s super pool is the fourth-largest pool of retirement capital in the world, with assets totaling A$4.5 trillion ($3.23 trillion.) The U.K.’s pension market is the second largest globally, holding assets worth more than £3 trillion ($4.9 trillion). Access to this capital has the potential to drive growth in both economies.
By seeking out global investment opportunities, Australian super funds and U.K. pension funds are building diverse and resilient portfolios that can help deliver long-term retirement outcomes, Chalmers said.
“The MoU provides a framework for governments to work more closely together to support investment opportunities,” he added. “This could include in areas of shared interest such as housing, renewable energy, infrastructure and venture capital. It will enable structured engagement between the Australian super funds and the Sterling 20 through joint missions, strengthening our investment environment and increasing the visibility of investment pipelines. The MoU does not direct how funds invest. Each fund remains fully independent to act in the best financial interest of [its] members.”
The U.K.-Australia announcement comes as super fund leaders are meeting with government officials and industry leaders in France and the U.K. this week, seeking long-term global investment opportunities, according to an IFM Investors statement.
The Australian delegation will meet with senior French political leaders, public financial institutions, infrastructure leaders, private investors and the Organization for Economic Co-operation and Development to discuss opportunities for long-term capital investment in France and later in the week in the U.K.
The discussion will include the potential for the enablement of super funds to deploy more capital into European and U.K. private markets, including for priority, high-quality infrastructure projects.
The group making the visit includes IFM Investors, AustralianSuper, Australian Retirement Trust, Aware Super, Cbus, HESTA, Rest, and the Super Members Council. Nest, the U.K.’s largest workplace pension scheme and a shareholder in IFM Investors, is also part of the delegation.
Super funds have invested for many years in French and U.K. infrastructure assets, including investments through ERG—a European renewable energy operator with 605 megawatts of installed wind capacity, 128 MW of solar capacity—and Atlas Arteria, a company that operates French toll roads.
A version of this article originally appeared in our sister publication, Financial Standard, which, like CIO, is owned by ISS STOXX.
Tags: Superannuation