Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • February 2015
02

DC assets predicted to overtake DB assets in 'next few years'

Open-access content Wednesday 11th February 2015 — updated 2.03pm, Thursday 30th April 2020

Defined contribution (DC) pension fund assets will become the the majority of global pension fund assets, according to a study.

In the Global Pension Assets Study, carried out by Towers Watson, global DC assets grew by 7% during a 10-year period from 2004 to 2014, while defined benefit (DB) assets grew by 4%. Since DC pension assets grew from 38% to 47% of the global market, the firm expected DC assets to overtake DB assets "in the next few years" - approximately in 2020. 

Roger Urwin, global investment director at Towers Watson, suggested the increasing prevalence of DC schemes meant control of outcomes was shifting from institutions from savers.

He said: "The inexorable shift to DC, which we believe will soon constitute the majority of global pension fund assets, means it is becoming the dominant global pensions model. This brings with it the transfer of risk and a new tension in the balance of ownership and control, which will test governments and pension industries around the world."

Australia was reported to have the highest proportion of DC pension assets (85%), compared to 15% DB pension assets. This was followed by the US, with 58% DC pension assets and 42% DB assets. Towers Watson said that only these two countries had a larger proportion of DC assets than DB assets.

In the study, Japan, Canada and the Netherlands were dominated by DB pensions with 97%, 96% and 95% of assets invested in these types of pensions, respectively. The UK had one third (29%) of DC pension assets. 

On a global level, the report, which covered 16 major economies, estimated global pension assets to be $36 trillion (£23.7 trillion) - 84% of global gross domestic product (GDP) at the end of 2014. 

According to the study, the largest pension markets were the US, the UK and Japan with 61%, 9% and 8% of total worldwide pension assets respectively.

Urwin said: "While there has been a significant improvement in various pension balance sheets around the world since the financial crisis, many DB pension funds are still in very weak solvency positions. With global pension assets at only 84% of global GDP, the pensions industry gets quite poor marks for providing good value for the worker and pensioner populations. 

"The acid test for national pension systems should be to get assets to at least 150% of GDP. If that were combined with an improving recognition of good governance as a return driver and sustainable investing as genuinely value adding, it would put the pensions world in much better shape."

The study covered pension fund assets of the following countries: Australia, Brazil, Canada, France, Germany, Hong Kong, Ireland, Japan, Malaysia, Mexico, the Netherlands, South Africa, South Korea, Switzerland, the UK and the US.

All figures were affected by rounding. 

This article appeared in our February 2015 issue of The Actuary .
Click here to view this issue

You may also be interested in...

ta

'Conservative' insurance companies need to consider a variety of asset management techniques

Insurers should consider a range of asset management techniques because of challenges from new regulations and a low-yield environment, a conference was told.
Tuesday 17th February 2015
Open-access content
Greek elections © Shutterstock

Conflict, sluggish growth and low oil prices increase supply chain risk

Global supply chain risk increased at the end of last year, with the CIPS Risk Index (CRI) indicating a rise for the first time in five quarters.
Thursday 12th February 2015
Open-access content

10 questions to ask when advising pension holders

With the new pension reforms taking effect from April 2015, the Society of Pension Professionals (SPP) has published a guide with 10 fundamental questions to ask savers when discussing their pension plans.
Tuesday 10th February 2015
Open-access content

Technology to 'dominate' the insurance sector, says ABI

Technology will be the “megatrend” dominating the insurance sector, a conference was told.
Monday 9th February 2015
Open-access content
ta

Trustees will breathe a 'sigh of relief' at pension transfers guidance

Pension scheme trustees will breathe a sigh of relief thanks to new guidance on pension transfers, according to Barnett Waddingham.
Friday 13th February 2015
Open-access content

Firm warns of 'disastrous' decisions if people do not use Pension Wise

Over three quarters of people have no intention of using the government’s retirement guidance service Pension Wise, and this could prove “disastrous” if people make decisions without guidance, according to a survey.
Monday 16th February 2015
Open-access content
Filed in
02
Topics
Investment
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Reserving Analyst

London (City of)
Negotiable
Reference
149485

Senior GI Modeler - Capital and Planning

London (Central)
£ excellent
Reference
149436

Risk Oversight Manager

Flexible / hybrid with a minimum of 2 days per week office-based
£ excellent
Reference
149435
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ