Vanguard Announces Australia's $2 Trillion Pension Fund

Vanguard, the second-largest fund manager in the world, formed a pension fund in Australia on Friday, six years after the last new fund license was issued. Vanguard wagers that its reputation for minimal expenses will enable it to tap into Australia's billions of dollars in retirement savings.

Australia's superannuation funds are establishing investment offices in New York and London as global managers monitor a savings pool that has risen from A$148 billion to A$3.3 trillion ($2.18 trillion) over three decades.

Twenty-four years after the launching of Vanguard's first Australian fund, Vanguard Super opens with twelve products, including a default "Lifecycle" fund that shifts a member's assets to more conservative investments as they age.

According to accounting firm Deloitte study commissioned by Vanguard, costs for the default choice will be the lowest on the Australian pension market for younger members and those with balances under A$50,000.

"We strive to give members with a low-cost, high-quality superannuation fund that includes a default offer that follows them throughout their lives," said Daniel Shrimski, managing director of Vanguard Australia.

As the first new entrant into the Australian superannuation market in years to get an RSE license, and despite industry consolidation, we believe we can improve retirement outcomes for Australians and serve as a catalyst for much-needed industry change.

The emphasis on expenses and performance is the outcome of legislation that went into effect in July of last year forcing pension funds to inform members if they fail to meet government-established performance objectives.

In the next months, a platform for financial advisers who handle client funds will become operational.