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Press Release

Global pension funds weather the storm of 2020


February 16, 2021

  • Global institutional pension fund assets record double digit growth in 2020, up 11% to US$52.5 trillion
  • The total pension assets to GDP ratio reached a record high, up 11.2% to 80.0%
  • In the decade ending 2020, China (21.0%), South Korea (12.3%) and India (10.7%) are the fastest growing pension markets in terms of total assets
  • Global defined contribution (DC) assets are estimated to represent almost 53% of total pension assets in the seven largest pension markets
  • The last 20 years has seen a continued rise in allocations to private markets and other alternatives, from just 7% to 26%, mostly at the expense of equities

LONDON, February 16, 2021 – Global institutional pension fund assets in the 22 largest major markets (the “P22”) continued to climb in 2020 despite the impact of the pandemic, rising 11% to US$52.5 trillion at year end, according to the latest figures in the Thinking Ahead Institute’s Global Pension Assets Study.

The seven largest markets for pension assets (the “P7”) – Australia, Canada, Japan, the Netherlands, Switzerland, the UK and the US – account for 92% of the P22, unchanged from the previous year. The US remains the largest pension market, representing 62% of worldwide pension assets, followed by Japan and the UK with 6.9% and 6.8% respectively.

According to the study, there was a significant rise in the ratio of pension assets to average GDP, up 11.2% to 80.0% at the end of 2020. This is the largest year-on-year rise since the study began in 1998, equalling the increase recorded in 2009 as pension assets bounced back after the global financial crisis. Whilst the measure usually indicates a stronger pension system, the sharp rise also underlines the economic impact of the pandemic on many countries’ GDP. Among the seven largest pension markets, the trend was even more pronounced with a 20% rise in the pension assets to GDP ratio to 147% in 2020, from 127% the year before.

The research also shows the shift to alternative assets continues, marking two decades of change in pension fund asset allocation globally. In 2000, just 7% of P7 pension fund assets were allocated to private markets and other alternatives, compared to over a quarter of assets (26%) in 2020. This shift comes largely at the expense of equities, down from 60% to 43%, in the period, while bond allocations fell marginally from 31% to 29%. The average P7 asset allocation is now equities 43%, bonds 29%, alternatives 26% and cash 2%.

DC assets are now estimated to represent almost 53% of total pension assets in the seven largest pension markets, from 35% in 2000, making it the dominant model for pensions globally. During the last ten years, DC assets have grown at 8.2% per annum, while defined benefit (DB) assets have grown at a slower pace of 4.3%.

Australia continues to have the highest proportion of DC to DB pension assets, with 86% of its total pension assets in DC funds, while conversely Japan (95%), the Netherlands (94%), and the UK (81%) continue to be dominated by DB pension assets.

Marisa Hall, co-head of the Thinking Ahead Institute said: “In what was a highly tumultuous year, pension funds continued to grow strongly in 2020, underpinned by ongoing multi-decade themes such as the rotation from equities to alternatives and the growth of DC, now the dominant global pensions model. This paints a picture of a resilient industry in good health and relatively well placed to weather the effects - economic and otherwise - of the ongoing pandemic. This is good news for billions of savers around the world. However, this shouldn’t mask the growing set of challenges that industry leaders face, particularly around addressing broader stakeholder groups’ needs and wants, while continuing to deliver financial security for their fund members.

“We believe one of the main challenges for pension funds, and opportunities for impact, is the effective stewardship of their assets. It is clear that the unstoppable ‘ESG train’ is picking up pace, and in some cases is being turbo-charged by climate change and the accelerating path to net zero. It is this focus on sustainability that will truly shape the pensions industry in the coming decades. A significant reallocation of capital is expected as the investment world undergoes a paradigm shift in extending its traditional two-dimensional focus on risk and return to one of risk, return and impact.”

Other highlights from the study include

Global asset data for the P22 in 2020

  • The US (62%) continues to be the largest market in terms of pension assets, followed by Japan and the UK with 6.9% and 6.8% respectively.
  • Total pensions assets to GDP ratio reached 80.0% at the end of 2020
  • The Netherlands continues to have the highest ratio of pension assets to GDP (214%) followed by Canada (193%) and Australia (175%).
  • The average ten-year compound annual growth rate (CAGR) figures (in USD) for P22 markets is 6.2%.
  • Estimated five-year growth rates (in local currency) range from 0.3% per annum in Spain to 15.0% in India.
  • The US continues to hold the largest weighting (62%) within the P22; while the weights of South Korea and China also marginally increased relative to the other markets in the study, over the past ten years.
  • Ten-year figures (in local currency) show the Netherlands grew its pension assets the most as a proportion of GDP by 93 percentage points (pp) to reach 214%, followed by Australia (62pp to 175%), the US (55pp to 157%), Canada (55pp to 192%) and Switzerland (51pp to 164%).

Asset Allocation for the P7

  • Equities allocations for the P7 markets have decreased by 17 percentage points in aggregate during the past 20 years (60% to 43%), which funded the corresponding increased allocation to alternative assets. 
  • Allocations to bonds remained only marginally lower in P7 markets, down 2 percentage points to 29%.
  • The home bias towards equities has fallen, on average, with the weighting down to 38.5% in 2020 from 67.0% in 2000.

DC / DB assets for P7

  • DC pension assets have grown from 35% in 2000 to 53% in 2020 of total pension assets.
  • Australia continued to have the highest proportion of DC to DB pension assets, with 86% of its total pension assets in DC funds.
  • Japan (95%), the Netherlands (94%), the UK (81%) and Canada (61%), continue to be markets dominated by DB pension assets.

Notes to editors

  • The P22 refers to the 22 largest pension markets included in the study which are Australia, Brazil, Canada, Chile, China, Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, South Africa, South Korea, Spain, Switzerland, the UK and the US.
  • The P7 refers to the seven largest pension markets (92% of total assets in the study): Australia, Canada, Japan, Netherlands, Switzerland, UK and US.
  • All figures are rounded and 2020 figures are estimates.
  • All dates refer to the calendar end of that year.

About the Thinking Ahead Institute

The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and asset managers committed to mobilising capital for a sustainable future. It has over 45 members around the world and is an outgrowth of the Willis Towers Watson Investments’ Thinking Ahead Group which was set up in 2002. Learn more at

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.

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