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  • September 2014
09

Top pension funds hold nearly $15 trillion in assets, Towers Watson finds

Open-access content Tuesday 2nd September 2014 — updated 5.13pm, Wednesday 29th April 2020

The value of the assets held by the world’s largest 300 pension funds reached nearly $15 trillion last year and accounted for nearly half of all global holdings, an analysis by actuaries Towers Watson has found.

Today's annual report, undertaken with US newspaper Pensions and Investments found that the assets of these top funds had grown to $14.9trn, up by more than 6% compared to 2012.  

Chris Ford, Towers Watson's global head of investment, said quantitative easing and loose monetary conditions had provided a boost for equality markets over the last five years, which continued strongly in 2013. 

He said: 'This clearly helped many funds given their high allocation to equities. Despite ongoing high performance from equities many funds - particularly more mature funds - continue to diversify into other asset classes as they de-risk their portfolios. 

'There is also broad acknowledgement that QE and low interest rates will not last forever and that recent exceptional equity market growth is unlikely to repeat in 2015.'

According to the report, the US remained the country with the largest share of pension fund assets accounting for 36% of the total. 

Japan had the second-largest market share of around 13%, largely because of the government-backed Pension Investment Fund, which had assets worth around $1.2trn. The Netherlands has the third-largest market share with 7%, while Norway and Canada are fourth and fifth largest respectively with over 6% share each.  

The analysis also revealed that defined benefit funds accounted for 67% of total assets, down from 75% five years ago. 

Assets held by DB schemes grew by only 3% in 2013, compared to reserve funds (15%), defined contribution plans (9%) and hybrids (over 8%).

Ford added: 'The continuing growth of most pension markets is genuinely encouraging; despite the fact that many structural issues remain.  

'It is noteworthy that the 13 major pensions markets are now more than double the size they were ten years ago and pension assets now amount to around 78% of global GDP, substantially higher than the 61% recorded in 2008.

This article appeared in our September 2014 issue of The Actuary.
Click here to view this issue
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