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Press Release

Global top 20 pension fund assets rebound strongly

Investments
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September 8, 2020

ARLINGTON, VA, September 8, 2020 — Assets under management (AuM) at the world’s 300 largest pension funds increased in value by 8.0% to a total of $19.5 trillion in 2019, in contrast to the 0.4% decline the year before, according to the latest top 300 pension funds research from Willis Towers Watson’s Thinking Ahead Institute.

The research shows that the value of the top 20 pension funds’ AuM also rose by 8.1% in the same period, equating to 40.7% of the total AuM in the rankings, unchanged from the previous year. According to the research, the compound annual growth rate of the top 20 funds during the past five years was 5.5%, compared with 4.9% for the top 300 funds during the same period.

“Overall, the world’s largest pension funds staged a strong rebound in growth in 2019, following a tough market environment the year before,” said Roger Urwin, co-founder of the Thinking Ahead Institute. “However, this positive result does not detract from the multiple pressures currently facing pension funds, from concerns around solvency levels to rising expectations with regard to ESG [environmental, social and governance] considerations, particularly concerning 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 time.

“Large funds are typically using best practice governance to manage these 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.”

Among the top 300 funds, defined contribution (DC) assets grew by 9.2% during 2019, while defined benefit (DB) assets increased by 7.1%. DB funds account for 64.2% of the total AuM in the research, down modestly from 64.7% the previous year. The share of DB funds slightly decreased across all regions, except for Asia Pacific, where the same level was maintained. DB plans are more prevalent in North America and Asia Pacific where they represent 74% and 65% respectively. To a smaller degree, DB plans are also more prevalent in Europe (53%), whereas DC plans are more common elsewhere, particularly in Latin American countries, accounting for 71% of assets.

The share of reserve funds (those set aside by a national government against future liabilities) increased by 9.9%, while hybrid fund assets (those with both DB and DC components) increased by 11.7% during the year.

Sovereign and public sector pension funds account for 68.3% of the total AuM in the research, with 144 funds of this type in the top 300. Sovereign pension funds account for $5.6 trillion of the assets, while sovereign wealth funds account for $8.2 trillion.

North America remains the largest region in terms of AuM and number of funds, accounting for 43.8% of all assets in the research, followed by Asia Pacific (26.6%) and Europe (25.8%). Asia Pacific has the largest annualized growth rate in the past five years at 7.0%. North America and Europe had annualized growth rates of 5.1% and 2.8%, respectively, while Latin American and African funds’ AuM increased 2.6% during the same period.

A total of 30 new funds entered the top 300 in the past five years, with the U.S. contributing the greatest net number of new funds (14), having had 10 funds leave the ranking and 24 join. In contrast, the U.K. had the highest net loss of funds (four) during the same period. The U.S. continues to have the largest number of funds in the top 300 ranking (142), followed by the U.K. (23), Canada (18), Australia (16) and Japan (13).

On a weighted average for the top 20 funds, assets are predominantly invested in equities (45.4%) followed by fixed income (36.8%) and alternatives and cash (17.8%). Regarding weighted average allocations by region, North American and European funds have predominantly invested in equities (43.9% and 50.9%, respectively), while Asia Pacific funds have largely allocated assets to fixed income investments (51.7%).

There were no changes in the composition of the top 20 funds in 2019.

Top 20 pension funds (USD millions)*

U.S.* funds’ data are as of September 30, 2019.
Non-U.S.* funds’ data are as of December 31, 2019, except where noted. Non-U.S. funds’ data is sourced from
Annual Reports, official websites or figures provided by WTW associates.
U.S.* figures are sourced from P&I 1000, published on February 10, 2020.
1 Estimate
2 As of March 31, 2020
Rank Fund Market Total Assets
1 Government Pension Investment Fund Japan $1,555,550
2 Government Pension Fund Norway $1,066,3801
3 National Pension Fund South Korea $637,279
4 Federal Retirement Thrift U.S. $601,030
5 ABP Netherlands $523,310
6 California Public Employees U.S. $384,435
7 National Social Security Fund China $361,0871
8 Central Provident Fund Singapore $315,857
9 Canada Pension Canada $315,3442
10 PFZW Netherlands $243,8392
11 California State Teachers U.S. $243,311
12 Employees Provident Fund Malaysia $226,101
13 Local Government Officials Japan $224,006
14 New York State Common U.S. $215,424
15 New York City Retirement U.S. $208,458
16 Florida State Board U.S. $173,769
17 Employees’ Provident India $168,0951
18 Ontario Teachers Canada $159,666
19 Texas Teachers U.S. $157,632
20 ATP Denmark $144,983

Forward-looking statement

The information included in this presentation is intended for general educational purposes only and does not take into consideration individual circumstances. Such information should not be relied upon without further review with your Willis Towers Watson consultant. The views expressed herein are as of the date given. Material developments may occur subsequent to this presentation rendering it incomplete and inaccurate. Willis Towers Watson assumes no obligation to advise you of any such developments or to update the presentation to reflect such developments. The information included in this presentation is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this presentation are hypothetical. As such, this presentation should not be relied upon for investment or other financial decisions, and no such decisions should be taken on the basis of its contents without seeking specific advice. Willis Towers Watson does not intend for anything in this presentation to constitute “investment advice” within the meaning of 29 C.F.R. § 2510.3-21 to any employee benefit plan subject to the Employee Retirement Income Security Act and/or section 4975 of the Internal Revenue Code.

Willis Towers Watson is not a law, accounting or tax firm and this presentation should not be construed as the provision of legal, accounting or tax services or advice. Some of the information included in this presentation might involve the application of law; accordingly, we strongly recommend that audience members consult with their legal counsel and other professional advisors as appropriate to ensure that they are properly advised concerning such matters. In preparing this material we have relied upon data supplied to us by third parties. While reasonable care has been taken to gauge the reliability of this data, we provide no guarantee as to the accuracy or completeness of this data and Willis Towers Watson and its affiliates and their respective directors, officers and employees accept no responsibility and will not be liable for any errors or misrepresentations in the data made by any third party.

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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 service providers committed to changing and improving the investment industry for the benefit of the end saver. It has 45 members around the world and is an outgrowth of Willis Towers Watson Investments’ Thinking Ahead Group, which was set up in 2002.

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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