Global Pensions Strengthened in 2009

February 1, 2010 ( – Global institutional pension fund assets in the 13 major national markets increased by 15% during 2009, from $20 trillion to more than $23 trillion, according to Towers Watson's latest global Pension Assets Study.

A Towers Watson news release said the 2009 performance is in sharp contrast to a 21% fall in asset values during 2008 and brought asset levels back to 2006 levels. The study also revealed that the global pensions balance sheet strengthened by around 10% in 2009, compared to a 25% fall in 2008.

According to the study, pension assets now amount to 70% of the average global GDP, down from 76% a decade earlier, but substantially higher than the equivalent figure in 2008 of 58%.

“The global financial crisis was a huge wake-up call and problems of poor systemic design in the industry point to increased likelihoods of further periods of financial distress in [the] future,” said Carl Hess, global director of investment at Towers Watson, in the news release. “While the recovery of markets will be welcomed, it is hoped that it will not stifle recognition of these as major issues for governments and companies to address. I fear that without exceptional leadership we will have another tough decade in the pension and investment world.”

Other highlights regarding the top 13 pension markets include:

  • On average, global pension assets (measured in local currency) grew by over 16% in 2009, compared with an 11% fall in 2008, improving the 10-year average growth rate to almost 7%.
  • Despite losing market share in the past ten years, the U.S., Japan, and the U.K. remained the largest pension markets in the world, accounting for 57%, 14%, and 8%, respectively, of total pension global fund assets.
  • All countries saw significant growth in pension assets in 2009 (measured in local currency), contributing to a positive growth rate over the last five years. The exception is Japan, where the growth in 2009 was not enough to provide positive growth over the last five years.
  • In terms of 10-year compound annual growth rate (CAGR) (in local currency terms), these are mostly positive,  with Brazil (18%), Hong Kong (14%), the Netherlands (12%), and Australia (10%) having the highest, and Japan (1%), Switzerland (2%), the U.S., (3%) and the U.K. (3%) having the lowest, Towers Watson said.

The 13 largest pension markets included in the study are Australia, Canada, Brazil, France, Germany, Hong Kong, Ireland, Japan, Netherlands, South Africa, Switzerland, the U.K., and the U.S, and account for more than 85% of global pension assets.

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