For World’s Pensions, Asia Sees Growth while America Falters

(September 10, 2009) – Asian and Australian pension funds have vastly outperformed their American brethren in recent years, a new study shows.

According to a Watson Wyatt/P&I report, the Asia Pacific region—which includes the mighty Australian super funds—has appreciated 19% over the past five years. This figure significantly outdoes the 4% return by North American funds over the same time frame. These growth returns take into account contributions from plan sponsors and investment returns.

The survey—which looks at the 300 largest pension funds globally—also indicates that larger funds did better, on average, than smaller ones. While the average pension plan in the survey lost 12.6% overall in 2008, the largest funds—those in the top 20—only lost 4.1% on average. This had the effect of seeing the 20 largest funds increase their share of total assets from 36.5% to 40.6%. Funds that fell out of this top 20 included both the Ontario Teachers’ Pension Plan and the Canada Pension Plan (which lost 34% and 30%, respectively), as well as American-based AT&T (-23.8%) and New York State Teachers’ (-16.6%). Taking their place were Denmark’s ATP, Japan’s National Public Service Fund, and the provident funds of both Singapore and Malaysia.   

While the growing prominence of Asian and European funds may signal a shift in global asset-owner power, America, despite poor recent returns, still holds a near-majority of pension fund assets (40%, down from 43% in 2007).