Global Pension Assets Rebounded in 2023 With 10% Gain

Assets of the largest 300 pension funds reached $26.2 trillion, according to WTW.



Pension funds worldwide regained lost ground in 2023, following a year of poor returns in 2022. Assets of the largest 300 pension funds grew 10% to $26.2 trillion at the end of last year, according to WTW’s Thinking Ahead Institute in the firm’s “Global Top 300 Pension Funds” report. 

Despite strong returns in 2023, pension assets have not returned to all-time highs yet, due to their 12.9% decline in 2022

Across the 300 funds tracked by WTW, which include defined benefit, defined contribution, hybrid plans and reserve funds, 144 were based in the U.S., making up 37.9% of all AUM. 

The Government Pension Investment Fund of Japan took the top spot as the largest asset owner on the list with $1.593 trillion in assets at the end of 2023, followed by Norway’s Government Pension Fund at $1.584 trillion, South Korea’s National Pension Fund at $801.864 billion, the U.S. Federal Retirement Thrift with $782.835 billion and the Netherlands’ ABP with $552.376 billion.

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Defined benefit plans made up 60.8% of all assets, while defined contribution plans made up 26.4% of assets at the end of 2023. Reserve funds—those set aside by governments to guarantee pension payouts into the future—made up 10% of assets. Hybrid plans that incorporate both DB and DC components made up 3% of assets.

The 20 largest funds by size had a weighted average allocation of 40.8% to equities, 42.2% to bonds and 17% to alternatives and cash.

In North America and the Asia Pacific region, defined benefit plans accounted for a majority of pension assets at 72% and 62.5%, respectively. In Asia Pacific, defined contribution plans accounted for 29.1% of assets, and reserve funds accounted for 8.4%.

In North America, defined contribution plans accounted for 28% of all assets. There were no reported hybrid or reserve funds in this segment. In Europe, defined benefit plans made up 45.8% of all assets, while defined contribution plans accounted for 12.8%, reserve funds 36.9% and hybrid plans 4.6%.

Other key findings of the study include:

  • The 20 largest funds made up 42.1% of AUM in 2023, up from 41.5% in 2022;
  • Latin American and African funds reported the highest five-year annualized returns, at 7.7%, compared with Asia-Pacific (5.2%), European (4.5%) and North American (4.2%); and
  • The 300 largest pension funds represented 40.7% of global pension assets.

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World’s Largest Asset Managers Lost $18T in 2022, According to WTW

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Immigration Critics Overlook the Good It Does, per State Street

The worker influx has led to moderate wage growth and thus held down inflation, according to the firm’s Arone.

Art by Melinda Beck


Immigration is a hot topic during this political season. Former President Donald Trump, the Republican nominee for president, has criticized his Democratic opponent, Vice President Kamala Harris, for a surge of migrants over the U.S.-Mexico border, numbers which dipped this year after the administration of President Joe Biden tightened access. Both candidates vow to restrict future inflows.

Still, critics of border crossings overlook the economic good that an influx of immigrants has created, according to Michael Arone, chief investment strategist at State Street Global Advisors for its U.S. SPDR business. “Immigration is a political football,” he noted in a commentary. “Regrettably, many people underappreciate the role that increasing immigration has played in stabilizing the post-pandemic labor market without” fueling inflationary pressures.

Limits on migration during the Trump Administration—it dipped to 750,000 annually over Trump’s four-year span, , down from around 1 million historically—“combined with the post-pandemic challenges contributed to extreme supply/demand imbalances in the labor market in 2021,” he wrote.

But migration traffic increased to 2.5 million in 2023 and is on pace to reach the same level this year, Arone added. “The rise in immigration over the past couple of years has helped the labor market achieve greater equilibrium without stoking wage inflation,” Arone wrote.

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He pointed to a survey by Empirical Research Partners showing that for low-skill service positions, where wage growth peaked at 8.5% in 2022, it currently is 4.2%. The labor market is “moderately tight,” he stated.

This moderation of wage growth has helped slow the pace of inflation, Arone observed. The Consumer Price Index’s increase decelerated to 2.9% in July from a recent peak of 9.1% in June 2022 (the August CPI reading will be released on Wednesday). The Federal Reserve is expected to decrease its policy short-term rate, now effectively 5.33%, when it meets September 17 and 18.

To Arone, a lot of the talk about immigration has been “senseless fear-mongering.” In his view, the “positive economic impacts from increased immigration start from gainful employment but rapidly extend to greater entrepreneurship, innovation, consumption and fiscal contributions.”

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Lower Inflation Should Herald Higher Stock Prices Ahead, Strategists Say

 

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