In an address to the National Press Club on Wednesday, Schroder said the sector is entering a pivotal phase, with two-and-a-half million Australians set to retire by 2035.
“It is more than a wave, it is a tsunami of working Australians about to retire,” he said. “Some planning, some preparing, and so many not sure what to do. This is what I’m thinking about – how can we deliver for them, so they all live well in retirement?”
Highlighting AustralianSuper’s domestic investment pipeline, Schroder outlined a blueprint for governments and super funds to work together to ensure funds can continue to "create wealth and prosperity for working Australians and underpin the Australian economy".
While stressing the fund’s $40 billion commitment and super’s overall ability to contribute to “national renewal”, he cautioned against treating super as a “trillion-dollar fix-all” for national projects.
“The potential for super to be an engine room of Australia’s sustained prosperity is unrealised,” the CEO said.
“This isn’t and can’t be about government telling funds what to do. We must be clear-eyed about where interests align, and where they don’t.
“We must recognise the difference between the national interest and the interests of organisations and individuals.”
Schroder put forward a “build-to-sell” model, where the government takes on development risk for new projects before selling or leasing the assets to investors such as super funds.
“One way this can work is for governments to build assets, with the plan to sell or lease them later to long-term investors like super funds. Or as I like to say: build to sell ... that’s a model very much worth exploring. They can build secure in the knowledge it is more likely there will be a willing buyer, at the right time and the right price,” he said.
“This is a natural evolution of a process that state and federal governments have used many times in this country.”
Schroder’s comments come amid increasing pressure on super funds to invest in the national interest, alongside the government’s announced review of the performance test to ensure funds are not avoiding certain investments solely to meet benchmarks.
Elaborating on the fund’s $40 billion plan, the CEO said the fund is interested in initiatives that would deepen the corporate bond market, back innovative businesses, and fund critical infrastructure to support Australia’s future.
But, while cognisant of super’s major role and influence on the domestic economy, he emphasised the system’s scale also makes offshore investment essential.
“We’re in the top 20 pension funds in the world and we expect to break into the top 10 by 2035, when we’re forecast to be managing $1 trillion for 5 million members,” Schroder said.
“So, it’s understandable that Australian super funds are also going overseas and judiciously buying ports, airports, roads, energy infrastructure, data centres, shares, bonds and property – shipping returns from these investments back home for members.”
In fact, the CEO referred to it as “global investing for domestic beneficiaries”.
“Australia is now one of the few countries in the world that exports equity capital – meaning we invest more overseas than we borrow. That’s a key reason why our net foreign liabilities have more than halved between 2016 and 2025,” he said, adding that these investments are helping fund a better future for the nation.
“Our economy was built off the sheep’s back and expanded by the ore we dug out of the ground. Capital exports could drive our future prosperity.”
While acknowledging the often-cited truth that Australia’s super system is the envy of the world, Schroder warned: governments must make big projects investable before funds can back them.
“It would be a disaster for members if governments tried to tell us what to invest in,” he said. “Members carry the investment risk, and it is their money.
“The solution requires government and funds to come together in open dialogue about how to better balance risk and make projects investible. Big national projects must consider who is best placed to bear the risk.”
Schroder said the government’s role is to set the nation’s direction and deliver the infrastructure and services it needs, while super funds should only be tasked with deploying capital into productive investments to grow members’ retirement savings.
Done well, he said, these roles can reinforce each other. In translation, building the businesses the country needs can also generate the returns members expect.
Performance test key to member outcomes
Schroder also weighed in on the government’s intention to review and possibly overhaul the performance test, stressing that the key point is simply that a performance test exists.
“I think we were the first institution to call for it,” he said during a Q&A session. “It is really important to protect members’ interests, and for members to have confidence that the funds they’re in are performing well.”
He conceded, however, that there are better ways to administer the test – ways that would give members a “more useful sense of performance”.
“The current performance test doesn’t really take account of strategic asset allocation … We’re open to it improving, and it really should be, ‘Did your fund make you money or not’.”
At the same time, Schroder argued that the industry must overhaul how retirement works for members.
“We’ve become a world leader in the accumulation of retirement savings,” he said. “We must become a world leader in the delivery of retirement incomes.”
Among the reforms he urged were changes to let members move seamlessly between work and retirement, and secure data sharing between government and funds to simplify access to the Age Pension.
Schroder also highlighted groups still disadvantaged under the system, including women, gig workers, migrants and First Nations Australians.
“All Australians deserve to live well in retirement,” he said. “Too often that is not true for Aboriginal and Torres Strait Islander people where lower life expectancy, less time in well-paid work and the challenges of language and record-keeping can all have a material, detrimental impact.”
The super system’s growth has underpinned both individual and national prosperity. With $4 trillion currently in the system – expected to double to $8 trillion by 2035 – Schroder said super funds provide long-term stability in volatile markets, support the Age Pension, and create capital for productive investments at home and abroad.
“Super funds have the opportunity to be a powerhouse of Australia’s renewal – a chance for the sector, business, unions, the community and governments to find the sweet spots between national ambition and investment returns.”
He urged the industry and policymakers to act boldly, ensuring retirement remains secure, simple and equitable for the next generation.
“We owe it to them [retiring Australians] to get this right.”
