Total assets of global pensions up by 10%

The total assets of the world’s largest 300 pension schemes grew by almost 10% in 2012, compared to around 2% in 2011, to reach USD $14 trillion, according to research by Towers Watson and US investment newspaper Pensions and Investments (P&I).

The P&I/Towers Watson global 300 research found that, by region, Asia Pacific has had the highest five-year compound growth rate at 7%, compared to Europe (6%) and North America (-1%).

The Latin American and African regions had a growth rate for the same period of around 11%, albeit from a low base.

The US remains the country with the largest share of pension fund assets accounting for 35%. Japan has the second-largest market share of around 15%, while the Netherlands has the third largest (7%), and Canada and the UK both have the fourth largest (5%).

The research also found:

  • The world’s top 300 pension funds now represent more than 47% of global pension assets.
  • Defined benefit (DB) pensions account for 69% of total assets, down from 75% five years ago.
  • During 2012, DB assets grew by around 8% compared to around 12% for DC assets, while reserve funds grew by almost 18%.

Carl Hess, global head of investment at Towers Watson, said: “The rise in pension assets in 2012 was a combination of investment market recovery and new cash commitments.

“There were many similarities to the year before; bumpy recovery accompanied by occasional hyper volatility in markets, but with some notable differences which are cause for some encouragement for the first time in five years.

“While there is a diversity of pension systems around the world, each at varying stages of development, they all have in common the need to achieve future returns in a challenging investment environment.

“We believe that only those with the very best governance arrangements can take full advantage of their size and timeframe to make the most of what is beginning to look like a sustained, if weak, growth path.”