Global institutional pension assets grew
to $36.43trn at the end of 2016, a 4.3% increase from $34.9trn
at the end of 2015, according the Willis Towers
Watson’s Global Pension Assets study.
Total pension assets relative to GDP
however decreased by 18% from the 80% ratio in 2015 to 62% in
2016. The Netherlands has the highest ratio (168%), followed by
Australia (126%), Switzerland (123%), the US (121%) and UK
The US continues to be the largest market
in terms of pension assets (61.7%), UK (7.9%) and Japan (7.7%)
of total pension assets in the study. In the US dollar terms,
the pension assets growth rate of these three largest markets
in 2016 were 5.1%, 1.3% and 5.1% respectively.
The smallest markets in descending order
were: Ireland, India and Spain.
The report also shows that pension fund
assets have grown at 3.8% on average per year (in USD) over the
past five years, with the growth rate highest in China (20.3%),
where the study covers the Enterprise Annuities market, and
lowest in Japan (-5.4%).
During the past 10 years, Mexico has seen
the fastest compound annual growth rate (11.8%), followed by
South Africa (9.7%), Chile (9.2%), Brazil (8.0%), Australia
(7.9%) and Hong Kong (7.8%).
Growth in defined contribution (DC) assets
continued to outstrip that of defined benefit (DB) assets, with
DC assets now accounting for over 48% of global pensions
assets, compared with 41% in 2006.
During the last 10 years, DC assets have
grown at a rate of 5.6% per annum, compared with DB assets that
have grown at a slower pace at 2.6% per annum.
Countries with a higher allocation to DC
assets in 2016 were Australia with 87% and the US with
During the past 20 years, the study also
identified a decline in allocations to equities and bonds,
offset by an increase in allocations to alternative assets,
with the latter sharply increasing from 4% to 24%.
The Willis Towers Watsons study covers 22
major pension markets. China, Finland and Italy were added to
this year’s study.