About the Study
The Global Pension Assets Study estimates global pension fund assets across 22 major pension markets (the P22). These geographies now stand at US$58.5 trillion in pension assets and account for 68% of the GDP of these economies. The study, conducted by WTW and the Thinking Ahead Institute since the 1990s, includes an analysis of the seven largest markets (the P7): Australia, Canada, Japan, Netherlands, Switzerland, UK and the US, which comprise 91% of total pension assets.
Pensions markets are still very concentrated with the 7 largest markets accounting for most of the pension assets in the world.
The rise of DC becomes more pronounced every year that we conduct this study. While global pension assets continue to reach new record levels, it is those markets with larger pools of DC assets that are the main engine behind this continued growth.
A key trend that we have observed over the last few decades is the rotation from equities into alternative assets, as pension schemes have turned to private equity, property, and hedge funds, to diversify their portfolios and boost returns.
Jessica Gao
Key spotlight subjects
Asset owners are likely to face multiple challenges in the coming years. The study draws attention to 4 subjects significant to the investment industry and its building resilience.
Macro uncertainty and systemic risk
Overall, 2024 was a year of globally uneven performance with strong returns for risk assets, underpinned by U.S. economic strength and selective gains in emerging markets. Interest rates have generally remained elevated with the global economic outlook still uncertain due to geopolitical tensions and sluggish growth.
Increasing influence of politics on pension funds
The primary impact of governments has been through regulation and also via their influence as key stakeholders, which has expanded in line with the increasing size of asset pools and the growing significance of pensions in society. Investment industry must navigate the complex landscape where political shifts can influence market stability, regulatory frameworks and economic priorities while balancing these challenges with fiduciary duty obligations.
Rise in alternative assets
Pension schemes continue to turn to alternative investments, such as private equity, property, and hedge funds, and more recently private debt and infrastructure, to diversify their portfolios and boost returns. These alternatives offer the potential for higher return and reduced correlation with traditional assets like equities and bonds, enhancing overall portfolio robustness.
Pension funds’ increasing focus on ‘organisational alpha’
‘Organisational alpha’ refers to the unique combination of people, processes, skills, and governance within a pension fund organisation that collectively contribute to its ability to create sustainable value. Assessing and enhancing organisational alpha is crucial for building the organisational resilience to build portfolios that meet investment goals in fast-changing conditions.
Read the full report for more detail on asset size, concentration and weighting as well as asset allocation, DB/DC split and more.
