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September 13, 2016 at 09:00 AM
Assets of the world’s 300 biggest pension funds experienced their first decline since the beginning of the global financial crisis in 2015, down by more than 3 percent to a total of $14.8 trillion, compared with growth of over 3 percent in 2014, Pensions & Investments and Willis Towers Watson reported Monday.
Although assets fell last year, cumulative asset growth since the crisis approached 19 percent, the research showed.
North America had the highest five-year compound growth rate of around 6 percent, compared with 4 percent in Europe and 1 percent in Asia/Pacific.
The world’s top 300 pension funds now represent 42 percent of global pension assets, as of March 31, the report said.
During 2015, only hybrid plan assets grew, up nearly 14 percent, while all other fund types declined: defined benefit plans assets by 5 percent, defined contribution by 2 percent and reserve funds by an estimated 0.3 percent.
“The continuing tides of asset rises and falls combined with ever increasing liabilities bears testament to how difficult it has become for funds to meet their respective missions,” Roger Urwin, global head of investment content at Willis Towers Watson, said in a statement.
“Large asset owners can have an advantage in this volatile, complex and ambiguous investment world by improving organizational effectiveness to enhance decision making. It has become clear that good investment governance is the key determinant in producing the competitive edge necessary to transform portfolios and succeed in the ever-evolving mission of trying to pay benefits securely, affordably and in full.”
The new research showed the United States continued to have the largest share of pension fund assets, with 38 percent, while Japan had around 12 percent.
Twenty-seven new funds entered the ranking during the past five years, with the U.S. contributing 10 funds on a net basis, followed by the United Kingdom, South Korea, Australia, France, Peru, Vietnam and Italy.
During the same period, Mexico had the largest net loss of funds from the ranking (four), followed by Switzerland, Germany and Japan with net three fund losses each.
All told, the U.S. had 131 funds in the research, the United Kingdom 27, Canada 19, Australia 16, Japan 15 and the Netherlands 12.
Sovereign pension funds continue to feature strongly in the ranking, with 27 of them accounting for 28 percent of assets and totaling around $4.2 trillion.
Following are the P&I/Willis Towers Watson top 20 pension funds by assets. Rankings of sovereign pension funds are noted in parentheses.
South Africa’s Government Employees Pension Fund maintains offices all over the country including in Cape Town, seen here. (Photo: iStock)
20. GEPF — South Africa
Total assets: $103 billion.
Defined benefit: $103 billion.
Defined contribution: $0.
(No. 8-ranked sovereign pension fund)
19. ATP — Denmark
Total assets: $106.6 billion.
Defined benefit: $0.
Defined contribution: $106.6 billion.
Related: World’s biggest pension fund to add board in governance overhaul
Parliament Hill on the Rideau Canal, in Ottawa, Ontario (Photo: iStock)
18. Ontario Teachers — Canada
Total assets: $124 billion.
Defined benefit: $124 billion.
Defined contribution: $0.
17. Texas Teachers — United States
Total assets: $125.3 billion.
Defined benefit: $125.3 billion.
Defined contribution: $0.
Related: Canada reaches agreement on expanding national pension plan
Retirees in Florida can take time to enjoy placid beach scenes such as this one in Clearwater. (Photo: iStock)
16. Florida State Board — United States
Total assets: $147.8 billion.
Defined benefit: $139.2 billion.
Defined contribution: $8.6 billion.
15. New York City Retirement — United States
Total assets: $155.1 billion.
Defined benefit: $155.1 billion.
Defined contribution: $0.
Related: 9 milestones in the rise and fall of American pensions
Malaysia’s Employees Provident Fund is a government agency within the country’s Ministry of Finance, seen here. (Photo: Wikipedia Commons)
14. Employees Provident Fund — Malaysia
Total assets: $161.7 billion.
Defined benefit: $0.
Defined contribution: $161.7 billion.
(No. 7-ranked sovereign pension fund)
13. New York State Common — United States
Total assets: $173.5 billion.
Defined benefit: $173.5 billion.
Defined contribution: $0.
Related: 10 questions for a pension-fund manager
In Japan, the Government Pension Investment Fund is an independent administrative institution under the jurisdiction of the Ministry of Health, Labor and Welfare in Tokyo, seen here. (Photo: iStock)
12. Local Government Officials — Japan
Total assets: $176.2 billion.
Defined benefit: $176.2 billion.
Defined contribution: $0.
11. California State Teachers — United States
Total assets: $181.9 billion.
Defined benefit: $181.3 billion.
