European pensions growth more polarised

EUROPE – Private sector pension assets have grown to around 40% of total GDP in Europe, a rise of almost 10% on the level of four years ago, according to figures produced by consultant William M. Mercer in its annual European Pension Fund Managers’ Guide.

However, the consultant says it is noting increasing polarisation in Europe, in terms of total pension assets, between countries with funded or unfunded pensions systems.
Mercer points out that UK pension fund assets ($1.4trn - e1.6trn) now account for nearly 40% of Europe’s total pension fund assets.

The total is more than twice the number of assets held by four of Europe’s largest countries France, Germany, Italy and Spain, which together represent $677bn.

Nonetheless, the Mercer research shows that across the fifteen countries covered in detail by the guide, pension assets have burgeoned from a figure of 32% in 1996 to their present 40% tally, with the largest growth seen in the Netherlands – up from 121% to 162% of GDP.

Sweden has also recorded a boom in assets from 77% to 112% of GDP, while Denmark (77% to 112% GDP) and the UK (72% to 91%) have both enjoyed healthy growth.

Julia Hobart, worldwide partner at William Mercer, comments: “ Clearly the figures underline the importance of pension fund assets to the European economy. The key point is the polarisation between funded and unfunded Europe.
“ The UK represents nearly 40% of Europe’s total pension fund assets, while the four largest economies of Continental Europe are just starting to address the funding issue.”