Global Pension Assets Rebounded in 2023 With 10% Gain

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.