The total assets under management (AUM) held by the world’s 300 largest pension funds has increased this year to reach $19.5trn (£14.8trn).
The Thinking Ahead Institute's (TAI) latest top 300 pension funds research showed the funds' value had increased 8% from 2019 levels after a 0.4% year-on-year decline the year before.
Defined contribution (DC) assets grew 9.2% during 2019 on a worldwide basis, while defined benefit (DB) assets had an increase of 7.1%.
DB funds account for 64.2% of the total AUM, down slightly from 64.7% in 2019. The share of DB funds slid slightly in most regions but continued to dominate in Europe (53%). The share of reserve funds (those set aside by governments against future liabilities) increased 9.9% on a world basis, while hybrid funds composed of both DB and DC components increased 11.7% this year.
TAI co-founder Roger Urwin said: "This positive result does not detract from the multiple pressures facing pension funds, from concerns around solvency levels to rising expectations with regards to ESG considerations, particularly concerns climate and social issues.
"Perhaps most notably of course, we are still witnessing ramifications from the Covid-19 crisis, and as we anticipate further economic uncertainty in the months ahead, these challenges make pension fund boards' agendas more complex and stressed than at any previous times."
Thirty new funds have entered the top 300 since 2015, with the US contributing the greatest net number of new funds.
European funds had an annualised growth rate of 2.8% during the year, behind North America and the Asia Pacific but ahead of Latin America and Africa.
The compound annual growth rate of the top 20 funds during the past five years was 5.5% compared to 4.9% for the top 300 funds for the same period.
The UK saw the highest net loss of funds, at four, in the top 20 this year, with Australia, Canada and Japan joining the US in dominating the list.
"Overall, the world's largest pension funds staged a strong rebound in growth in 2019, following a tough market environment the year before," Urwin said.
"Large funds are typically using best-practice governance to manage complex agendas and retain a strategic focus. One of their top priorities now is harnessing the power of data and technology, an area where the pensions industry has generally lagged other areas of business and finance.
"Notwithstanding the significant costs of investing in new technologies, and the challenges of managing data, these two areas are critical tools in improving the people, processes, and information that will determine which funds prosper in the years ahead."
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