According to a press release on the study results, since 1997 assets of the largest eleven pension industries have increased from 64% to 82% as a proportion of the Gross Domestic Product (GDP), and during the same period GDP grew by 57%, while global pension fund assets doubled. Hong Kong has the highest Compound Annual Growth Rate (CAGR) for a ten-year period at around 16% per annum and Japan has the lowest at around 3% per annum
The U.S., Japan, UK and Canada, respectively, were the largest pension fund markets in 2007, now accounting for 87% of total assets, Watson Wyatt said. The smallest markets in descending order were Germany, France, Ireland, and Hong Kong with the latter showing continued high growth since its pension reforms in 2000.
The U.S. represented the largest market by some margin at the end of 2007, accounting for around 60% of total pension fund assets globally.
In 2007 equity allocations of retirement plan assets shrank from around 60% to 56%, and during the same period bond allocations increased to 28% from 26%. Other assets, especially real estate and to a lesser extent hedge funds, private equity, and commodities, have grown from 12% to 16% in recent years, according to the press release.
During the ten-year period since 1997 the CAGR of defined contribution plan assets was 10% compared with around 5% for defined benefit plan assets during the same period. DC assets now comprise 44% of global pension assets, compared with 34% in 1997.
The countries that show a larger proportion of DC assets than DB assets are the U.S., Australia, and Switzerland, while Japan and the Netherlands are close to 100% DB. Australia has the highest proportion of DC pension assets, having increased from 73% to 87% of overall assets between 1997 and 2007.
The Global Pension Assets Study 2008 is available here .