GLOBAL – Global pension fund assets grew by 27% to $8.4trn (€6.7trn) during 2004, according to consulting firm Watson Wyatt.
The total is above the previous high of $6.6trn in the previous year. “Large increases in assets occurred in most major countries consistent with the general recovery in markets,” it said.
“During the year, which was characterised by rising equity markets and US dollar weakness, it was non US-based funds with significant equity allocations that achieved the highest US-dollar growth,” a statement said.
“As a result non-US funds appear to have been strongest, with all countries posting over 10 per cent growth rates in US dollar terms.
Of European countries, Denmark was up 23%, the Netherlands grew by 20% and the UK rose by 18%. But in local currency terms the average growth was “more muted”.
“Equity markets continued to strengthen during 2004 helping to repair pension fund balance sheets around the world, although the improvements were quite modest because of falls in bond rates,” said Roger Urwin, global head of investment consulting at Watson Wyatt.
“While better markets have provided welcome relief, plan sponsors have also focused on funding issues and increased contributions to ease pressure on their pension funds.
“While strategic changes have been limited during the past 12 months more funds have diversified their assets, mainly into bonds and alternatives.”
Urwin added: “Despite impressive asset growth in many countries during 2004, from increased contributions and investment income, the majority of funds remain in deficit positions because of ballooning liabilities.
“This will continue to force funds in these countries to seek better ways of spending their risk budgets largely by increasing asset diversity within portfolios.”
According to the ‘Red Book’, the international pensions directory published by Aspire, total worldwide assets come to $7.8trn (€6.4trn). Aspire is a joint venture of IPE and AP Information Services.