The value of pension assets globally rose by 4.9% in 2024 to reach a record-high level of US$58.5 trillion, thanks largely to the growth of the largest defined contribution (DC) markets.
However, the annual Global Pension Assets Study published by the Thinking Ahead Institute, a non-profit research group founded by WTW, also showed some disparity in the growth of different national pension markets.
For example, the study, which covered the ten largest DC markets, showed that while there has been relatively little change in the last 20 years for the top seven countries, the most rapid growth.
Australia has seen the size of pension assets grow by 500% over the last 20 years and should this level of growth continue, Australia will become the second largest pension market globally.
In contrast, the UK has seen the slowest growth among the top ten markets and was the only country to see negative annual growth over the last year at 0.7%.
Similarly, the UK recorded the slowest growth of the largest seven markets over the last ten years and its global share of pension assets among the 22 largest markets fell from 8.8% to 5.4% between 2014 and 2024.
“While global pension assets continue to reach new record levels, it is those markets with larger pools of DC assets that are the main engine behind this continued growth,” said Jessica Gao, director at the Thinking Ahead Institute.
“As the size of these asset pools continues to increase, we are seeing increased influence by governments towards pension funds, primarily through regulation, which has expanded in line with both the size and growing significance of pensions in society. This has been particularly evident in countries such as Canada, Australia, and the UK.”
The survey also showed a move away from equites to alternative assets such as private equity, hedge funds and property as pension funds seek greater returns.
According to Gao, the understanding of these asset classes has also increased. “In the past, alternatives were grouped into a single category, but we now see a more granular approach being taken to these investments, with asset owners making distinct allocations of capital to the different asset classes such as private debt, commodities, liquid alternatives and infrastructure,” said Gao.
