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pension aum rise not enough towers watson

Assets under management (AUM) in the largest 300 retirement schemes neared $14trn (€11trn) last year, equating to almost half of global pension assets.

North America remained the biggest region in AUM terms, with 40.5% of the total, followed by Europe (28.5%) and Asia Pacific (26.3%).

On a country-by-country basis, the US accounted for the largest share of pension assets (35%), ahead of Japan (15%) and the Netherlands (7%). The UK was the only other European nation to feature in the top five, with a share of 5%.

Top pension funds by AUM (’12)
Rank Fund Country AUM ($bn)
1 Government Pension Investment Japan $1,292
2 Government Pension Fund Norway $713
3 ABP Netherlands $373
4 National Pension South Korea $368
5 Federal Retirement Thrift US $326
6 California Public Employees US $245
7 Local Government Officials Japan $201
8 Central Provident Fund Singapore $188
9 Canada Pension Canada $184
10 National Social Security China $177

Smaller markets growing faster

However, smaller markets achieved the highest compound annual growth rates (CAGRs) over the five years ending 2012, Towers Watson found.

Australia and Taiwan topped the list in dollar terms – with average CAGRs of 12.8% and 10.6% respectively – while Danish and Mexican pension schemes both achieved double-digit CAGRs, in krone and peso terms respectively.

Australia also led the way in terms of the number of funds entering the largest schemes by AUM, with four additions; closely followed by Germany, with three. The US saw the biggest decline, with 17 funds dropping out of the top 300.

Growth ‘probably not enough’

Carl Hess, global head of investment at Towers Watson, noted that last year was “encouraging” for the pensions sector, but warned against complacency.

“Despite healthy growth in 2012, [the] annualised growth rate [of the top 300 funds] for the past five years is just over 3%, which is probably not enough to ensure they all meet their obligations absent capital injections” he wrote.

“Indeed some most probably will not, particularly in what is predicted to be a low-growth, volatile and highly competitive marketplace for some time yet.”

A PDF of the report can be downloaded from the Towers Watson website, here.

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