GLOBAL - Growth of institutional pension assets in the 11 major markets has reached 17% in 2005, up 7% on the previous year and outpacing liabilities, according to Watson Wyatt.
The research showed pension fund liabilities in 2005 increased by approximately 9% on average in local currency terms, leading to an improvement in national funding positions of around 8% (compared to 30% falls between 1999 and 2002).
However despite three consecutive years of balance sheet strengthening, the estimated asset/liability position globally is still 19% weaker than in January 2000.
Roger Urwin, head of investment consulting at Watson Wyatt, said the growth was largely due to rising markets, although liabilities remained “stubbornly high as bond yields continue to falter globally”.
The global research also showed that total pension fund assets in all the main markets, apart from the US and Japan, had doubled in size during the past ten years with notably sustained strong growth of pension fund assets in Australia, a market, Watson Wyatt stressed, dominated by DC assets.
“The market share of DC is now around 25% of total pension assets and has been increasing at a rate close to 1% a year,” Urwin said.
“It has been interesting to watch this growth in various countries, particularly Australia where strong government support in various forms, including legislation for mandatory contributions, has helped improve pension provision.”
According to the research, Ireland had the highest ten-year growth figure (312%), due largely, Watson Wyatt claimed, to the establishment of its National Pension Reserve Fund in 2001.
US had the lowest ten-year growth figure posting only 72%.
Industry Voice: Sponsored by Eaton Vance
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.