Global Pension Assets Study 2019
This study follows the investment trends of the ‘Top 22’ countries as measured by the size of their pension fund assets. These countries include Australia, Brazil, Canada, Chile, China, Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, South Africa, South Korea, Spain, Switzerland, UK and US.
It is published by global not-for-profit group the Thinking Ahead Institute. The objective of this group is to influence change in the investment world for the benefit of the end saver. Highlights of the study included the following:
- In 2018 global pension assets reached an estimated USD 40,173 billion, a decrease of 3.3% over the year.
- The US remains the largest pension market by a large margin, followed by Japan and the UK. Together they account for over 76% of all pensions assets.
- During the last ten years, the fastest growing pension markets were Australia (10.2%), Chile (10.2%) and Hong Kong (8.5%), measured in USD.
- France and Japan had the slowest rates of growth in USD terms since 2008 (0.1% and -0.7% respectively). During this time, South Africa’s pension fund assets grew by 4.2%, just less than the average measured in the study, which was 5.3%.
- The study noted that during the past decade, the weights of Australia, Chile, Hong Kong, Mexico, UK and US increased relative to other markets in the study while the weight of Canada and Ireland remained unchanged. During this time, South Africa’s relative weight declined from 0.7% to 0.5% of measured pension fund assets.
- The survey noted that the asset allocation pattern has changed since 1998. Allocation to equities decreased while investments in other assets grew during the same period.
Key issues in the next five to ten years.
The study noted that pension design was continually moving towards a Direct Contribution (DC) model and that DC had become the dominant global model. At the same time, it was noted, DC models were in a state of flux. Key issues included the fact that platforms continued to emerge and that scale ensured that costs were kept low. At the same time, the focus had shifted from the provision of lifetime income, rather than asset accumulation.
It was noted that pension funds would become more regulated, including the introduction of regulations in underlying holdings. Governance issues would also be high on the agenda for the next five to ten years.
According to the Thinking Ahead Institute, investment organisations were expected to increasingly differentiate themselves by referencing their values and culture. New measurement models and methods would continue to emerge. Engagement with sustainability and long-horizon investing would present companies with the opportunity to differentiate. There would be new opportunities in sustainability, ESG, stewardship and long-horizon investing. At the same time technology would challenge business models and human capital.
For more information, download the study here.