Global institutional pension fund assets in the 11 largest markets (P11) contracted by approximately 19 percent in 2008, from USD 25 trillion to about USD 20 trillion, according to Watson Wyatt’s Global Pension Assets Study, released on January 26, 2009. The fall is in sharp contrast to an average five-year growth rate of 12 percent up to end-2007, and takes assets back to below 2005 levels.
The main results of the study included the following:
- Pension assets from the P11 now amount to 61 percent of average GDP, down from 72 percent 10 years ago. All countries saw significant negative growth in pension assets in 2008, except Germany, which benefited from its high bond allocations.
- Despite losing some market share in the past 10 years, the U.S., Japan and the U.K. remain the largest pension markets, collectively accounting for approximately 83 percent of total global pension fund assets. Australia is the fastest-growing market, and also the fifth largest.
- Global pension funds’ balance sheets, measured by asset values over liability values, deteriorated on average by 29 percent in 2008, as assets fell significantly and liabilities increased. This contrasts with the five-year period prior, when this measure improved on average by 4 percent.
- For the P7, which refers to the 7 largest pension markets (around 97 percent of total assets in the study), allocations to equities fell from around 51 percent to 42 percent in the five years leading up to 2008, while bond allocations increased from 36 percent to 40 percent in the same period.
- Defined contribution plans now account for 45 percent of global pension assets in the P7, compared with only 30 percent in 1998.
The P11 are the 11 largest pension markets included in the Global Pension Assets Study – namely Australia, Canada, France, Germany, Hong Kong, Ireland, Japan, Netherlands, Switzerland, the U.K. and the U.S. The study also analyzes seven of these markets in more depth – the P7, which excludes Germany, France, Hong Kong and Ireland from the list above.
Read the press release
Read the 2009 Global Pension Assets Study