Compulsory superannuation has seen the Australian superannuation system grow faster than any of the 22 countries surveyed by Willis Towers Watson.
The Global Pension Assets Study, conducted by the consulting firm's Thinking Ahead Institute, found that Australian pension fund assets grew by 7.1 per cent per annum (in Australian dollars) over the past decade.
The ratio of Australian pension fund assets to GDP is now 138 per cent, up from 126 per cent in 2016.
Willis Towers Watson senior investment consultant Paul Newfield said the asset growth, while positive, was due to unusually high market returns.
"Australia’s world-leading performance over the last 20 years has been underpinned by compulsory contributions, higher growth asset allocations and general strength in investment markets," Mr Newfield said.
However, the home country bias in Australia (53 per cent of equities are invested in the local market) means that retirees are "particularly susceptible" to a decline in equity markets, he said.
"This characteristic is apparent across the Australian pension landscape but is somewhat more acute in the self-managed superannuation fund (SMSF) area," Mr Newfield said.
"For this reason, we maintain that there should be greater asset diversity in portfolios through a reduced dependency on equities and an increase in allocations to alternative investments; and within equities a lower allocation to Australian equities."
Global pension assets overall grew by US$4.8 trillion in 2017, according to the report.
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