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Top Countries’ Pension Assets Fall 19 Percent

March 5, 2009
Related Topics: Retirement/Pensions, Workforce Planning, Latest News
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The value of pension assets in the 11 largest retirement markets dropped 19 percent in 2008 to $20 trillion, according to a Watson Wyatt Worldwide report. The firm’s global pensions balance sheet, which measures funding status, dropped by 29 percent for the year.

“This data shows a worrying picture,” Roger Urwin, global head of investment consulting, said in Watson Wyatt’s 2008 Global Pension Asset Study. “While this [asset] decline is offset in some countries by the development of sovereign wealth funds, we should remember that SWFs amount to only around a tenth of the size of global pension fund assets. This is a wake-up call for governments worldwide to engineer bigger allocations to pension savings.”

The U.S., Japan and the U.K. remained the world’s three largest pension markets, accounting for at 61 percent, 13 percent and 9 percent of worldwide assets, respectively.

Also, defined-contribution assets had a compound annual growth rate of 7.5 percent between 1998 and 2008, compared with 1.4 percent for defined-benefit assets in the top seven pension markets—Australia, Canada, Japan, the Netherlands, Switzerland, the U.K. and the U.S. Defined-contribution plans make up 45 percent of total retirement assets of the so-called P7, compared with 30 percent a decade ago.

“The year when DC assets overtake DB assets is approaching,” Urwin said in the report. “Despite this growth, the innovation in DC strategies has not kept up. DC investment approaches often seem rudimentary and expensive."

Filed by Timothy Inklebarger of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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