UK and global pension fund assets have increased in 2016, according to a new report from consultants Willis Towers Watson. In addition it said that UK pension fund assets rose by an average of 6.5% over the last 10 years, while global assets grew by 3.8% in dollar terms in the last five years.
Willis Towers Watson global head of investment content, Roger Urwin, said: “Pension funds worldwide made some progress against their headwinds in 2016. This was largely because equity markets and alternative asset classes produced gains ahead of expectations. While funds in many countries have large pension outflows to deal with, it was encouraging to see overall asset values rise in the vast majority of countries covered in the study.”
The report found that the Netherlands has the highest ratio of pension assets to GDP (168%), followed by Australia (126%), Switzerland (123%), the US (121%) and the UK (108%). China, based on its enterprise annuities market, has the lowest ratio (1.2%). In addition, the report said that DC pensions are growing at a faster rate (an average of 5.6% over the last ten years), compared to 2.6% for DB assets. DC assets now make up 48% of pension fund assets overall.
Urwin added: “This study suggests that the key medium-term trends for pension funds continue to be: focus on risk, attention to governance, pensions design with DC models in the ascendant, pressure on talent, streamlining of the value chain and integrating ESG considerations. Each of these is a tough challenge, taken together they multiply to a pretty formidable agenda.”