Lucky 13 as pension fund assets grew 4% last year

The value of pension funds across the 13 largest pension markets — of which Ireland is one — grew by 4% during 2011 to reach a new high of $28 trillion.

The increase is a continuation of the growth trend evident since 2009, when assets grew by 17%. That performance followed on from a 21% fall in asset value in 2008. But global pension fund assets have now grown at over 6%, on average, per annum since 2001. However, despite the growth, pension fund balance sheets weakened last year — with the ratio of global assets-to-liabilities well down from its peak in 1999.

The figures, from New York-based professional services company, Towers Watson, show pension assets amounted to 72% of global GDP, last year. This was slightly lower than in the previous year, but still well up on the 61% level recorded in 2008.

“In case investors needed any reminding, the last six months of 2011 have driven home the need to have investment strategies that are flexible and adaptable and which contain a broader view or risk. This approach makes greater allowance for extreme events, which are occurring more frequently, while accommodating the softer elements of risk — such as credit and liquidity,” according to Joseph O’Dea, global head of investment at Towers Watson.

“There is still some way to go before the appropriate measurement and management of risk is firmly embedded in the governance structures of most pension funds,” he added.