U.S., Japan Remain Largest Pension Markets in the World

February 11, 2011 (PLANSPONSOR.com) - Global institutional pension fund assets in the 13 major markets increased by 12% during 2010 to reach a new high of $26 trillion according to Towers Watson’s Global Pension Assets Study.

The U.S. and Japan remain the largest pension markets in the world, accounting for 58% and 13%, respectively, of total pension fund assets globally.   

According to a press release, all markets saw growth in pension assets in 2010 (measured in local currency), and all markets in the study have positive ten-year compound annual growth rate (CAGR) figures. In terms of ten-year CAGR figures (in local currency terms), Brazil has the highest growth of 15% followed by South Africa (13%), Hong Kong (11%), and Australia (10%). Japan (0.2%) and Canada (1%) are among the lowest.  

The proportion of pension assets to GDP in the U.S. is104%; Australia  is 103%. In the past ten years Canada has seen the greatest fall in the ratio of pension assets to GDP of -19%.  

Equity allocations in the U.S. fell from 64% to 49% during 2010. Australia, Canada and the U.S. have increased their proportion of alternative assets the most from nearly 8% in 2000 to more than 20% in 2010. Allocations to alternatives have remained relatively constant in Japan (4%).   

During the ten-year period from 2000 to 2010, the CAGR of DC assets was 7.5% against a rate of 2.9% for DB assets. DC assets now comprise 44% of global pension assets compared with 41% in 2005 and 35% in 2000.   

Australia has the highest proportion of DC to DB pension assets: 81%/19%. The U.S. has a larger portion of DC assets than DB assets, while Japan and Canada are close to 100% DB.   

The Global Pension Assets Study 2011 is available at http://www.towerswatson.com/research/3761.