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Global pension assets rose to $32 trillion in 2019

Global pension assets

Global pension assets rose to $32 trillion in 2019

According to information and data from the Organization for Economic Co-operation and Development, OECD, pension fund assets rose to $32 trillion in OECD area and $0.7 trillion in 29 other selected (non-OECD) reporting jurisdictions in 2019. A country by country analysis shows that the United States of America has the largest amount of pension fund assets in the amount of $18.8 trillion. The US is followed by the United Kingdom with pension assets of $3.6 trillion, Australia, $1.8 trillion, the Netherlands, $1.7 trillion, Canada, $1.5 trillion, Japan, $1.4 trillion and Switzerland, $1 trillion. With that, 90% of the total OECD area pension fund assets are held in those 9 countries.

Compared to 2018, OECD area pension fund assets grew by 13.9% while it grew by 11.3% in other reporting jurisdictions. With the exception of Poland and Ukraine, all the OECD countries some increases in their pension assets. The country with the largest increase is Armenia with 58.2%, followed by Turkey’s 37.3% growth rate.

Pension fund asset as a percentage of GDP, indicates that assets in 5 OECD countries exceeded the country’s GDP in 2019. These are Australia with 132% pension asset to GDP ratio, Iceland, 167.6%, the Netherlands, 191.4%, Switzerland, 141.1% and the United Kingdom, 123.3%. However, 44 out of the 66 OECD countries had pension asset to GDP ratios below 20%.

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African Representation; A few African countries made it to the list of pension fund asset growth in 2019. Ghana pension fund assets grew the most in Africa by 33.4% to settle at $3.14 billion, representing just 5% of its GDP. The next African country in terms of growth is Malawi with 23.1% growth, bringing its pension asset to $1.15 billion and15% pension asset to GDP ratio. Other African countries that recorded pension asset growths of note include Angola, 13.1%, Egypt, 10%, Kenya, 13.6%, and Namibia, 2.2%. Namibia has the largest Pension assets to GDP in Africa with 75% followed by Kenya’s 13.2%. The two largest economies in Africa, Nigeria and South Africa did not make it to the list, for reasons best known to the OECD.

Though Nigeria is not on the OECD list, according to data from the National Pension Commission, PenCom, pension asset value in Nigeria grew by 18.3% from $23.9 billion to $28.4 billion (translated at N360/$) representing a pension asset to GDP ratio of 26%.

Performance to the Rescue; Impressive Pension Fund Performance helped to buoy up global pension fund assets across the countries.  On average, 29 out of 46 countries recorded positive pension fund performance in excess of 5% with 13 of those countries recoding returns in excess of 10%. The highest return came from Lithuania with a 16.6% return, followed by Brazil’s 15.6% and the Netherland’s 13.8%. However, pension funds in Czech Republic and Poland recorded negative gains of 1.4% and 2.7% respectively. Among the African countries in the selected other jurisdictions, Egypt had the highest return of 4.8%, flowed by Malawi’s 2% return.

Brace for a poor 2020: 2020 is not expected to be a repeat of 2019 due to the effects of Covid-19.  According to the OECD, “early estimates suggest that pension fund assets will decline to $29.8 trillion by the end of Q1 2020”.  It also noted that pension investors should not panic as “Saving for retirement is for the long haul and financial losses can be recouped over the long term, unless assets are withdrawn prematurely”.

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