The World’s Largest Pension Funds Shrank in 2018

Assets under management at the 20 biggest retirement funds fell last year, according to Willis Towers Watson.

Illustration by II

Illustration by II

Assets held by the 300 largest pension funds in the world fell by $81 billion during last year’s “tougher market environment,” according to new research from Willis Towers Watson.

At the end of last year, these retirement funds managed a combined $18.03 trillion, down from about $18.11 trillion at the end of 2017, the firm’s Thinking Ahead Institute said in its annual World 300 report with Pensions & Investments. The decline compares with a 15.1 percent jump in assets under management in 2017.

Among the 20 biggest retirement funds, meanwhile, assets under management shrank last year by 1.6 percent to $7.3 trillion — marking the first time their share of total pension assets fell since 2012. In 2017, by comparison, the value of the top 20 funds had jumped by 17.4 percent.

“A tougher market environment in 2018 meant AUM growth paused, but the underlying trend remains one of growing pension markets worldwide,” Bob Collie, head of research at the Thinking Ahead Institute, said in a statement on the findings.

Over the past five years, for instance, Willis Towers Watson said that the top 300 pensions increased by 3.9 percent annually, while the 20 biggest funds had an annualized growth rate of 4.7 percent.


On average, the top 20 funds have 40.6 percent of their portfolios allocated to equities, 37.4 percent invested in bonds, and the rest in alternatives and cash.

[II Deep Dive: Emerging Markets Send Pension Assets Surging]

“The pace of change in the investment world is a challenge, and scale is a huge advantage in a lot of ways,” Collie said. “Many of the most interesting and important developments start with the largest funds, and as new investment ideas like the total portfolio approach and universal ownership gain traction in these organizations, they influence the whole market.”

Although 2018 saw an overall dip in assets for the world’s largest retirement funds, there was at least one area of growth. According to the report, assets under management by defined contribution plans rose by 5.1 percent, in contrast to the 0.2 percent decline for defined benefit funds.

However, defined benefit assets still made up nearly two-thirds of pension assets managed by the top 300 funds at the end of 2018, according to Willis Towers Watson. Defined contribution assets, meanwhile, accounted for 23.9 percent of the total, with the rest held in government reserve funds and hybrid funds incorporating both defined benefit and defined contribution elements.