Australian pension assets are among the developed world's fastest-growing, showing a compounded annual growth rate of 17 per cent, according to the Towers Watson Global Pension Assets Study.
In absolute terms, Australian pension assets grew from US$ 270 billion ($ 255 billion) in 2001 to US$1.3 trillion ($1.2 trillion) in 2011, which is 96 per cent of Australia's gross domestic product.
The growth has been propelled by the strong Australian dollar, the country's mandatory Superannuation Guarantee system, and relatively high allocation to growth assets, such as equities, the study said.
Global institutional pension fund assets in the 13 major markets grew on average by 4 per cent last year to US$28 trillion ($26.5 trillion), an increase of US$2 trillion compared to 2010.
The United States, Japan and the United Kingdom remain the largest pension markets in the world, accounting for 59 per cent, 12 per cent and 9 per cent respectively of total pension fund assets.
Despite the growth in assets, pension fund balance sheets weakened globally during 2011, with the ratio of global assets to liabilities well down from the peak achieved in 1999, Towers Watson said.
"Governments and corporate sponsors of defined benefit (DB) funds throughout the developed world continue to face considerable challenges in dealing with DB deficits," Towers Watson director of investment services, Australia Graeme Miller said.
"By contrast, Australia's high allocation towards defined contribution (DC) funds means that our corporate and government balance sheets have not been impacted to the same extent as other countries," he said.
The study showed that pension funds have been increasingly allocating funds to alternative assets over the last 16 years.
Allocations to real estate and, to a lesser extent, hedge funds, private equity and commodities, for the seven largest pension markets have grown from 5 per cent to 20 per cent since 1995.
Over the last 10 years, most countries have increased their exposure to alternative assets with Australia increasing its allocation from 14 per cent to 24 per cent.
Switzerland has the highest allocation to alternatives with 28 per cent, followed by the US, which has an allocation of 25 per cent.
Bond allocations for the seven largest markets have decreased, with Australia having the lowest bond allocation at 18 per cent of total assets.
Australia maintains the highest allocation to equities at 50 per cent.
