From savings to global investment: the rise of Australia’s pension capital
The Australian retirement savings system, known as superannuation, has built the fourth-largest and fastest-growing pool of pension assets globally. As of June 2025, Australian pension funds collectively manage approximately A$4.3 trillion in assets, supported by mandatory employer contributions that have risen to 12 per cent of employee earnings. Total inflows of around A$4 billion each week continue to drive this growth, with the system estimated to reach A$8.3 trillion by 2035, likely becoming the largest pool of pension capital outside the US.

Australian funds are increasingly investing overseas
As the system matures, funds are increasingly looking to international markets to diversify risk and maximise returns. The proportion of portfolios invested outside Australia has increased to 47 per cent, with approximately 60 cents of every new dollar contributed now invested overseas. For the largest profit-to-member funds, this figure is closer to 70 cents. Based on existing trends, pension funds are estimated to have nearly A$3.6 trillion invested outside Australia by 2035, compared to approximately A$1.4 trillion today.

Destinations of choice: how Australian pension capital is invested in the UK and Europe
The UK and European Union (EU) together represent the second-largest international destination for Australian pension capital after the US. As of mid-2025, Australian pension funds had an estimated A$264 billion invested across the region, including A$83 billion in the UK and A$181 billion in the EU. Major funds including AustralianSuper, Aware Super, and Australian Retirement Trust have established a physical presence in London to proactively pursue investment opportunities and build partnerships with governments and commercial stakeholders.

Public markets dominate investment in the EU with private markets playing a larger role in the UK
Public markets form the foundation of these portfolios, accounting for 81 per cent of investments in the EU. In contrast, private markets represent almost half of Australian pension fund investment allocations in the UK, reflecting the depth and maturity of the London market for private equity, venture capital, and infrastructure finance. Infrastructure makes up over half of private market investments in both jurisdictions. In the UK, this is dominated by utilities (68 per cent), while in the EU, the largest portion is in energy assets (38 per cent).

Australian funds are strongly positioned to help close capital gaps in the UK and EU
The investment opportunity is substantial, as the UK faces a capital gap of up to A$4.1 trillion, and the EU requires an estimated A$7.1 trillion by 2030 to meet economic development objectives. Australian funds are well-placed to provide long-term, patient capital. Based on current trends, Australian investment into the UK and EU is expected to grow by more than 10 per cent per year, reaching a forecast total of over A$660 billion by 2035. This includes projected totals of A$203 billion in the UK and A$460 billion in the EU.

There are opportunities for Australian funds to deepen partnerships with the UK and EU
Governments are actively seeking to mobilise private capital for critical infrastructure, energy transitions, and digital transformation. In the UK, the Clean Power Mission to decarbonise the energy system by 2030 will require A$81.8 billion in additional annual investment. Case studies highlight successful partnerships, such as Aware Super’s A$1.02 billion commitment to Eelpower Energy alongside the UK’s National Wealth Fund, and IFM Investors’ infrastructure portfolio which includes stakes in Manchester Airport Group and various energy transition projects through VTTI.

Policy and regulatory reform can unlock further investment
To better attract capital, governments can evolve policy settings by streamlining regulation and accelerating planning processes. The UK’s Planning and Infrastructure Bill aims to reduce the time needed for consent orders by up to 30 per cent. Reforms to Foreign Direct Investment (FDI) screening regimes to exclude low-risk transactions could also ease burdens on investors. Additionally, expanding public-private partnership (PPP) models and ensuring predictable revenue settings in sectors such as energy, water, and transport will be critical for leveraging the scale of investment required.

Conclusion
Australian pension funds possess the scale, expertise, and long-term outlook to play a significant role in financing Europe’s future growth. By directing a growing share of capital into the region, they can help close critical investment gaps while delivering strong returns for Australian workers. Realising this potential will depend on deepening partnerships and creating stable, transparent policy frameworks that ensure projects are investable at scale.