Great foresight from Melbourne's business and investment chiefs has seen the city become a role model in the global pension fund market.
Two decades ago, as Australia's emerging pension fund model started its first steps on a journey to becoming a world leader, Ian Silk observed the actions of Melbourne's business and investment leaders.
It was evident then to Silk, now the chief executive officer of award-winning pension fund AustralianSuper, that the key investment-industry figures in the Victorian capital were determined to position Melbourne as a first-class pension fund management centre – a status that the city clearly holds today. The state's broader focus on being a finance and investment hub clearly complemented such a goal.
"Victoria was an early mover into public and private partnership (deals) and investing and selling of public assets," Silk says. "For AustralianSuper, this has meant that we've had the opportunity, from the very beginning, to have direct access (to) and knowledge of terrific investment opportunities.
"Importantly, we've also (been able) to access talented, high-quality staff in this city. Not only are Melbourne's educational institutions renowned, but Melbourne is a great place to live, meaning talented people look for opportunities locally. Equally, it's an attractive destination for people who are working outside Melbourne, or even overseas."
All Eyes on Victoria
With A$2.7 trillion of funds under management in Australia, the nation has attracted the attention of global governments eager to examine the distinctive features of the sunburnt country's pension fund industry, including collaboration with the private sector and innovative pension-management models.
They are also aware that the Australian pool of managed investment funds is the third-largest in the world and the largest in the Asia-Pacific. Such lessons from Australia will help other countries ensure their older citizens have access to adequate financial resources in retirement, a major issue as populations age.
In this vibrant Australian market, Melbourne's benefits as a centre of excellence in pension-fund management are two-fold. First, the city is an ideal location for investment management firms targeting business from Australia's financial services market, in addition to being the perfect base from which to access the high-growth Asian markets. Second, the ability to tap into the experience of pension fund and investment executives in Melbourne can potentially fast-track a firm's entry into Asia and other key markets.
Outstanding Investment Environment
Melbourne's banking and finance credentials are impressive. Its financial sector directly employs more than 100,000; the city is home to two of Australia's four largest banks, the ANZ Banking Group and National Australia Bank; Australia's A$122.79 billion sovereign wealth fund, known as the Future Fund, operates out of Melbourne, as do the Australian arms of a range of global banks and fund managers; while Victoria is also a global leader in best-practice infrastructure procurements.
The combination of such forces explains why the 2016 Melbourne Mercer Global Pension Index praises Melbourne's reputation as an international centre for pension fund management. The highly respected report compares the schemes of 25 countries – including economic powerhouses such as China, Singapore, the United Kingdom and the United States – and ranks Australia's pension model third among this impressive list.
The seeds of such success were planted in Melbourne 20 years ago.