UK institutional pension fund assets are now over £2 trillion, up 13% in the year, and now exceed those of Japan, according to Towers Watson.
In the report, Global Pension Assets Study, Towers Watson said that UK pension asset are now 131% of GDP and it is the second largest pension fund market after the US. Over a 10-year period to 2013, the proportion of assets allocated to equities at UK pension funds fell from 65% to 50%, while allocations to alternative assets rose from 3% to 14%. In 2013 institutional pension fund assets in 13 major markets grew by 9.5% to $32 trillion. Global pension fund assets have grown at an average annual rate of 6.7% since 2003.
Towers Watson EMEA head of investment, Chris Ford, commented: “During 2013 equities enjoyed their best calendar year of risk-adjusted return since the financial crisis, and as a result many UK pension funds are in the best shape they have been for many years. The global economic recovery continued to gain momentum throughout 2013, thanks to the absence of major negative events and a stream of positive economic news. After such a long period of financial retrenchment and uncertainty this is all genuinely encouraging. Generally, pension funds are now implementing investment strategies that are more flexible and adaptable, and which contain a broader view of risk so as to make greater allowance for the sort of extreme economic and market volatility they have experienced during the past five years.”