Australia’s superannuation system remains one of the most equity-heavy among the world’s largest pension markets, as global retirement assets climbed 9.6 per cent to a record US$68.3 trillion in 2025, according to the Thinking Ahead Institute’s Global Pension Assets Study 2026.
The study shows Australia holds an estimated US$2.97 trillion in pension assets, ranking fifth globally behind the US, Canada, Japan and the UK.
Pension assets now equate to 162 per cent of GDP in Australia, placing it among the highest-funded systems in the world, alongside Switzerland and Canada.
What distinguishes Australia most sharply, however, is its asset allocation profile.
In 2025, Australian pension funds held 55 per cent of assets in equities, 22 per cent in bonds, 16 per cent in alternative assets and 3 per cent in cash.
That equity weighting is materially higher than the P7 average of 48 per cent and above peers such as the UK and Netherlands, which maintain heavier bond allocations.
The ‘P7’ refers to the seven largest pension markets (91 per cent of total assets in the study): Australia, Canada, Japan, Netherlands, Switzerland, UK, and US.
Over the past two decades, Australian allocations have evolved but retained a strong growth bias, according to the study.
Across the seven largest pension markets, equity allocations have fallen from 57 per cent in 2005 to 48 per cent in 2025, while alternatives have risen from 13 per cent to 19 per cent.
Australia has followed that broader diversification trend but continues to maintain one of the highest equity exposures among major systems.
The structure of Australia’s superannuation system helps explain that positioning as defined contribution assets account for 90 per cent of Australia’s pension pool, making it one of the most DC-dominant markets globally, alongside the US.
Across the seven largest markets, DC assets represent 62.6 per cent of total assets and have grown at 9.4 per cent per annum over the past decade, compared with 2.9 per cent for defined benefit assets.
The DC structure has encouraged long-term growth-oriented portfolios, supported by compulsory contributions and strong inflows.
Over the past 10 years, Australian pension assets have expanded at 6.6 per cent per annum in US dollar terms.
Globally, the report noted that pension asset growth has broadly tracked market returns over long periods, with a reference 60 per cent equity and 40 per cent bond portfolio delivering 15.9 per cent in 2025.
Against that backdrop, Australia’s higher equity weighting leaves it more sensitive to market cycles but positioned to capture long-run growth.
Jessica Gao, director at the Thinking Ahead Institute, said: “2025 saw broad-based gains across global markets, with most major asset classes delivering positive returns. Equities performed especially well, while fixed income also posted gains in light of global rate cuts and narrowing credit spreads.”
“Looking ahead, the 2026 outlook is likely to be shaped by policy decisions, technological innovation and shifting global dynamics.
“Fiscal support and AI-related investment should remain important growth drivers. Inflation trends and central bank actions will be key, particularly in the US, where strong capital spending and supportive fiscal policy may continue to support growth and keep yields relatively elevated.”
She added that adopting a Total Portfolio Approach (TPA) is increasingly essential in a more uncertain and interconnected investment environment, enabling faster and more coordinated decision-making across organisations.