Australian pension funds are set to channel more than $1tn into overseas investments over the next decade, as the country’s $3tn superannuation system accelerates its international expansion, according to sources cited by the Financial Times.

According to the Super Members Council of Australia (SMC), international holdings are projected to triple to $2.6tn by 2035, with around 60% of the $1.8tn in new foreign exposure coming from fresh capital. The system as a whole is expected to grow to $7.2tn, surpassing Canada and the UK to become the world’s largest outside the US.

Rising mandatory contributions, now 12% of salaries compared with 9.5% in 2021, and a shortage of attractive domestic opportunities are fuelling the shift abroad. “Australia has the fastest growing super system globally — twice the rate of international peers,” said Misha Schubert, SMC chief executive.

AustralianSuper, the country’s largest fund with $250bn in assets, expects to nearly triple in size by 2035 and plans to allocate 70% of inflows internationally, with more than half directed to the US. The fund also aims to raise private equity allocations from 5% to 8% within five years. Aware Super, managing $132bn, opened its first London office last year and is ahead of schedule to invest $10bn across the UK and Europe.

The growing scale of Australian funds is drawing attention from policymakers abroad. In the US, senior government officials recently met superannuation leaders to court investment in infrastructure and data centres. The UK will host a superannuation summit next month to explore co-investment between its largest pension funds and their Australian counterparts.

“The growth of the Australian superannuation system has been remarkable. We absolutely need to be globalising,” said Damien Webb, deputy CIO at Aware Super.

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