The world’s largest pension markets recorded their biggest single-year asset growth last year.
According to Thinking Ahead Institute’s ‘Global Pension Assets Study’ global institutional pension fund assets in the 22 major markets grew to $41.3 trillion (€33 trillion) – their highest figure since the report began in 1997.
The total value of assets grew by $4.8 trillion in 2017, which was the largest single-year growth in dollar terms in the last 20 years and represented growth of over 13% during the year.
Pension fund assets grew steadily over the last 20 years at an average rate of 6.2% per annum, closely matching global public market equity and bond returns during the same period.
The study showed that in the seven largest pension markets in the last two decades, defined contribution (DC) assets grew at 7.9% per annum compared with 4.5% for defined benefit (DB) assets.
The US was the largest market in terms of pension assets followed by the UK and Japan. The Netherlands had the highest ratio of pension assets to GDP followed by Australia and Switzerland.
Roger Urwin, global head of investment content at Willis Towers Watson, said the results made for “encouraging reading”.
“The challenges faced by pension funds are complex. Our research suggests that pension plans must consider and address several key issues, such as: regulation; changes in the available investment universe; new investment methods; and how to measure progress and success of a pension plan.
“There is also the developing issue of true integration of environmental, social and governance, stewardship and sustainability within overarching investment.”
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