Australia Warns Pension Funds to Upgrade Systems Ahead of Major Growth

Australia’s corporate watchdog has urged the nation’s huge pension fund industry to invest more in technology, governance and operations if it is to meet future demands and avoid serious problems.

The Australian Securities and Investments Commission (ASIC) issued the warning on February 4, saying the country’s pension system, known locally as superannuation, currently holds about A$4.5 trillion (around USD3.16 trillion) in assets but is projected to grow to A$6 trillion by 2030. If that happens, the pension sector would become larger than Australia’s banking system, making its smooth functioning even more important.

ASIC Commissioner Simone Constant stressed that as the industry grows, fund managers must improve their investment in technology systems and governance to provide better service to members and prepare for a significant wave of retirements. She pointed to problems at the Australian Securities Exchange (ASX), which faced costly software failures and was hit with an additional A$150 million capital charge, as a cautionary example of what can happen when systems are under-invested.

The industry is already under pressure from other regulators as well. The Australian Prudential Regulation Authority (APRA) highlighted shortcomings in governance following the collapses of some managed investment schemes, saying poor investment oversight had contributed to financial harm for some investors.

APRA and ASIC are urging pension funds to strengthen governance practices, improve operational capability, and ensure that they can meet member needs as a large cohort of Australians enters retirement in the next decade. The emphasis is on future readiness and protecting retirees, not just managing money in the present.

Australia’s pension system has been growing rapidly thanks to mandatory employer contributions and strong investment returns. The sector plays an increasingly crucial role in the financial lives of Australians and is a major source of long-term national savings. Regulators now want to see that growth matched by investment in systems that can handle the next phase of challenges, including a rising number of retirees and more complex financial demands.