Global pension assets grew 3% to $30.9 billion last year, the third year of growth since the crisis of 2008 significantly reduced global assets, according to a report by financial trade body TheCityUK.
But liabilities, partly driven by increasing life expectancy, have continued to rise and the value of assets to liabilities is now 17% less than in 2007, representing a challenge to defined benefit schemes.
The results are broadly in line with other estimates of the size of the global pensions market. Recently, investment consultancy Towers Watson states that global pension assets were $28 trillion in 2011, having risen 4%.
Towers Watson differs from TheCityUK in stating that Japan is the world's second-biggest pensions market, accounting for 12% of total assets, and the UK is third with 9%. TheCityUK says the UK is the second biggest pensions market. Both reports agree that the United States has the most pensions assets by a large margin.
TheCityUK chief executive Chris Cummings said UK schemes are having to adapt their strategies to account for the increased liabilities.
“Risk reduction is the key trend in the UK. Many defined benefit schemes have been closed to new members with numbers dropping by three quarters from 4.1 million in 2000 to 1 million in 2010. Other means of mitigating risk include allocation to bonds, up from 20% to 34% over the last decade while lowering allocation to equities, down from 71% to 50% over the same period.”
©2012 funds europe