The world’s largest 300 pension funds saw their assets decline for
the first time since 2018, according to this year’s Global Top 300
Pensions Funds conducted by WTW’s Thinking Ahead Institute. This
drop is on par with the decline observed in 2008, occurring at a
pace that has only been encountered twice in the 20-year history of
this annual study.
The research highlights high-level trends in the
pension fund industry and provides information on the changing
composition of the top 300 list of pension funds globally as well
as the characteristics and investment allocations of these pension
funds.
By the end of 2022, combined assets of the
world’s top 300 pension funds had decreased by 12.9% and now total
$20.6 trillion compared with $23.6 trillion at the end of 2021.
This represents a sharp correction compared with the 8.9% increase
in the assets of the largest 300 pension funds in the previous
year. The latest drop is also greater than the 12.6% decline in
2008, at the time of the global financial crisis. Until now, the
2008 fall had been the fastest annual decline recorded in the 20
years of the study.
The U.K. and Japan had the largest number of
pension funds fall out of the top 300 globally. The U.K. gilts
crisis of September 2022 and the ensuing market instability were
significant contributing factors, as was the continuing shift from
defined benefit pensions to smaller defined contribution plans.
In 2022, sovereign and public sector pension
funds accounted for 152 funds in the top 300, representing 70.9% of
total assets. Sovereign pension funds accounted for $6.2 trillion
in assets, while sovereign wealth funds totaled $11.6 trillion.
Sovereign wealth funds’ assets grew by 13.9% during 2022, compared
with a decrease of 10.6% for the sovereign pension funds in the
Thinking Ahead Institute top 300 study.
“We sounded a note of caution last year when
reporting on a previous record. In last year’s research, we
anticipated rising inflation and interest rate pressures, as well
as the potential for slowing growth the following year,” said
Jessica Gao, director at the Thinking Ahead Institute. “With the
latest data, we have witnessed the drop in the pension assets, with
a fragile global economy seeing equity and bond markets reverse
previous gains.
“2022 recorded historic levels of economic
uncertainty and market instability. A convergence of regime,
geopolitical and systemic risks magnified in a VUCA-fest
(characterised by volatility, uncertainty, complexity, and
ambiguity), challenging pension funds to navigate and adapt within
this rapidly changing environment.”
Compared to all pension funds of any size, the
world’s largest 300 pension funds now represent 43.0% of the global
pension assets (compared to 41.1% in 2021), according to the
Thinking Ahead Institute’s annual Global Pension Assets Study which
estimates global pension fund assets across 22 major pension
markets (the P22).
Regionally, North America now accounts for 45.6%
of assets in the world’s 300 largest pension funds, while European
pension funds account for 24.1% and Asia-Pacific 26.4%.
Looking at the very largest, the assets of the
top 20 pension funds decreased by 11.8% in the last year, a slight
improvement compared to the 12.9% downturn observed within the top
300 funds overall. The top 20 funds accounted for 41.5% of the
asset under management (AUM) in the ranking, modestly above 2021’s
share of 41.0%.
The Government Pension Investment Fund of Japan
(GPIF) remains the world’s largest pension fund, with AUM of US$1.4
trillion. It has ranked top since 2002. Meanwhile, the Employees’
Provident Fund of India was the only new entrant in the top 20
funds for 2022.
Gao concludes: “While market performance has
improved from 2022 to 2023, we continue to proceed with a high
degree of caution. Pensions schemes are operating in a new
environment, where conditions are changing faster and faster each
day.
“Asset owners are increasingly influenced by
technological advancements and the rise of artificial intelligence.
Balancing the need to catch up with asset managers’ AI-driven
insights while retaining control over their investment mandates
underscores the critical role of effective collaboration and
strategic adaptation for AOs in an investment ecosystem with
increasingly influential technologies.
“Likewise, rightsizing sustainability efforts
has become a crucial balancing act, with overly ambitious
commitments risking the fund’s legitimacy, and too small a
commitment resulting in missed opportunities.”
Top 20 pension funds (US$
millions)
Rank |
Fund |
Market |
Total Assets |
1 |
Government Pension Investment |
Japan |
1,448,643 |
2 |
Government Pension Fund |
Norway |
1,300,214 |
3 |
National Pension |
South Korea |
706,496 |
4 |
Federal Retirement Thrift |
U.S. |
689,858 |
5 |
ABP |
Netherlands |
490,382 |
6 |
California Public Employees |
U.S. |
432,235 |
7 |
Canada Pension |
Canada |
420,7641 |
8 |
Central Provident Fund |
Singapore |
406,711 |
9 |
National Social Security |
China |
347,2142 |
10 |
California State Teachers |
U.S. |
290,384 |
11 |
New York State Common |
U.S. |
233,227 |
12 |
PFZW |
Netherlands |
231,781 |
13 |
New York City Retirement |
U.S. |
228,170 |
14 |
Employees Provident Fund |
Malaysia |
227,781 |
15 |
Local Government Officials |
Japan |
207,145 |
16 |
Florida State Board |
U.S. |
183,092 |
17 |
Ontario Teachers |
Canada |
182,410 |
18 |
AustralianSuper |
Australia |
176,4463 |
19 |
Texas Teachers |
U.S. |
173,277 |
20 |
Employees’ Provident |
India |
158,7222 |
US funds’ data is as of September 30, 2022.
Non-US funds’ data is as of December 31, 2022,
except where shown.
- As of March 31, 2023
- Estimate
- As of June 30, 2022
About the Thinking Ahead
InstituteThe Thinking Ahead Institute was established in
January 2015 and is a global not-for-profit investment research and
innovation member group made up of institutional asset owners and
asset managers committed to mobilising capital for a sustainable
future. It has over 55 members around the world, with combined
responsibility for over US$16 trillion*, and is an outgrowth of WTW
Investments’ Thinking Ahead Group - set up in 2002.
*As of December 31, 2022
About WTW
At WTW (NASDAQ: WTW), we provide data-driven,
insight-led solutions in the areas of people, risk and capital.
Leveraging the global view and local expertise of our colleagues
serving 140 countries and markets, we help organizations sharpen
their strategy, enhance organizational resilience, motivate their
workforce and maximize performance.
Working shoulder to shoulder with our clients,
we uncover opportunities for sustainable success—and provide
perspective that moves you.
Learn more at wtwco.com
Media contact
Ileana Feoli: +1 212 309 5504
Ed Emerman: +1 609 240 2766
eemerman@eaglepr.com
Willis Towers Watson Pub... (NASDAQ:WTW)
Historical Stock Chart
From Jun 2024 to Jul 2024
Willis Towers Watson Pub... (NASDAQ:WTW)
Historical Stock Chart
From Jul 2023 to Jul 2024