The Towers Watson Global Pension Assets Study 2014 revealed that total assets in Australian superannuation funds grew from US$424 billion in 2003 to US$1,565 in 2013.
This was well above the average global rate of 6.7 per cent.
Australian superannuation funds, however, have the second lowest compound annual growth rate for 2013, after Brazil.
Australian superannuation assets increased six per cent on a compound basis, which was below the global average of 9.5 per cent while the actual rate rose 4.4 per cent.
The study also found that 84 per cent of the assets in Australian superannuation funds are defined contribution assets, giving Australia the highest proportion of contribution assets relative to benefit assets at 16 per cent.
Australia also has the second highest allocation to equities and alternatives at 54 per cent and 25 per cent respectively.
The US had the greatest allocation to equities at 58 per cent and a 27 per cent allocation to alternatives.
Towers Watson senior investment consultant Martin Goss said the results in the study show the size and long-term growth of the Australian super system which has grown from high levels of contributions and the relatively high growth-orientated investment strategies.
“While our superannuation assets have not yet reached the size relative to GDP that exists in the Netherlands (170 per cent of GDP), they remain greater than our annual GDP and are catching up to the levels achieved in the UK, Switzerland and the US (131 per cent, 122 per cent, and 113 per cent of GDP, respectively),” said Mr Goss.
During 2013 equities generated their strongest calendar year of risk adjusted return since the financial crisis, said Mr Goss.
“As a result pension funds in most markets are in the best shape they have been for many years,” he said.
“The global economic recovery continued to gain momentum throughout 2013, thanks to the absence of major negative events and a stream of positive economic news and after such a long period of financial retrenchment and uncertainty.”
Mr Goss said pension funds are increasingly implementing more flexible and adaptable strategies with a broader view of risk.
“This is just as well because the global economic recovery – and the implied normalisation of market conditions – is by no means guaranteed,” he said.
