Vanguard launches Australian pension fund in bid for $2 trillion savings pool

The world’s second-largest fund manager Vanguard launched a pension fund in Australia on Friday, the first new fund licence approved in six years as it bets a reputation for low fees will help break into the country’s trillions of retirement savings.

Home to the third-largest pension pool in the world, Australia’s superannuation funds are opening investment offices in New York and London as global managers eye a savings pot that has grown to more than A$3.3 trillion ($2.18 trillion) from A$148 billion in three decades.

Twenty-four years after the launch of Vanguard’s first Australian fund, Vanguard Super opens with 12 products, including a default “Lifecycle” fund that gradually shifts a member’s holdings into more conservative investments as they age.

Fees for the default option will be the lowest in the Australian pension market for younger members and those with balances under A$50,000 ($33,080), according to analysis from accounting firm Deloitte commissioned by Vanguard.

“We want to deliver members a low-cost, high-quality super fund that includes a default offer designed to move with them right through life,” said Vanguard Australia Managing Director Daniel Shrimski in a statement.

“As the first new entrant into the Australian superannuation industry in years to gain an RSE licence, and launching despite industry consolidation, we’re here because we truly believe we can improve retirement outcomes for Australians and be a catalyst for much needed change in the industry.”

The emphasis on fees and performance comes as legislation that came into effect last July forces superannuation funds to inform members if they failed to meet government-set performance benchmarks.

A platform for financial advisers, who steward money on behalf of clients, is set to launch “in the coming months”.

($1 = 1.5115 Australian dollars)