World’s top pension funds revealed

04 September 2014   Category: News, Asia, Australia, Global, Japan, Korea, USA, Vietnam   By Daniel Shane

With more than US$1.2 trillion in assets, Japan’s Government Pension Investment Fund (GPIF) was for the tenth-year running ranked as the world’s largest retirement savings manager in an annual Towers Watson report.

The Towers Watson Global 300, which counts down the world’s top 300 pension managers, found that the combined assets of all of these funds increased by more than 6% year-on-year to almost $15 trillion.

However, the report said that overall Asia-Pacific pension assets declined to 24.7% of the top 300, down from 26.3% in 2013. North America remained the largest region in terms of assets, accounting for 41.4% of the worldwide total. According to the consulting firm, the leading 300 players now make up 47% of pension assets globally.

Towers Watson attributed the decline in assets among Asia-Pacific pension managers to poor performance among Japanese funds heavily invested in fixed income.

“In addition, the Japanese stimulus programme that led to the depreciation of the yen also caused the asset value of Japanese funds in US dollar terms to be lower,” commented Naomi Denning, managing director of investment services for Asia-Pacific at Towers Watson.

“Asian funds – with their allocations being biased towards domestic or Asia ex-Japan equities – performed less well during 2013, despite the strong performance of both the US and European equities.” 

In Asia, Towers Watson ranked a total of 14 Japanese pension managers among the top 300, giving the country the second highest share of the global market, following the US. This was despite three Japanese funds dropping out of the ranking compared to last year.

New funds to enter the top 300 from the region included Vietnam’s Social Insurance Fund, which came in at 280; Australia’s HOSTPLUS at 290; and Korea’s Government Employees Pension at 273.

Towers Watson said that it anticipated the global pension landscape to become more competitive over the coming year. “Most funds are unlikely to get adequate returns from the market in the coming year and will need to work hard in ‘added-value spaces’ to find the couple of extra percent per annum they need,” Ms. Denning added. “Investors will need to be well organised to deliver this and it will likely involve a substantial shift in focus away from security selection in equities and towards capturing returns from alternative markets and strategies.”

Top 20 pension funds

Rank Fund Market Assets (US$ millions)
1 Government Pension Investment Japan 1,221,501
2 Government Pension Fund Norway  858,469
3 ABP Netherlands 415,657
4 National Pension South Korea 405,521
5 Federal Retirement Thrift US 375,088
6 California Public Employees US 273,066
7 Canada Pension Canada 206,173
8 National Social Security  China 205,168
9 Central Provident Fund Singapore 200,376
10 PFZW Netherlands 196,933
11 Employees Provident Fund Malaysia 182,216
12 Local Government Officials Japan 179,820
13 California State Teachers US 172,424
14 New York State Common US 164,008
15 Florida State Board US 146,266
16 New York City Retirement US 143,925
17 Ontario Teachers Canada 132,445
18 Texas Teachers US 119,706
19 GEPF South Africa 117,681
20 Pension Fund Association Japan 117,636

(Source: Towers Watson)