Global pension assets increased by around 7 per cent in 2021 from USD 56.3trn to USD 60.6trn, the OECD’s latest Pension Markets in Focus report has revealed.

As reported by our sister title, European Pensions, nearly two-thirds (64 per cent), or USD 38.5trn, of pension assets were managed by pension funds.

In the OECD area, pension assets amounted to 105 per cent of total GDP, with pension assets in these countries totalling USD 58.9trn at the end of 2021.

Seven nations held more than 90 per cent of the total OECD pension assets, with the United States being the largest pension market with assets worth USD 40trn, 67.3 per cent of the OECD area total.

The United Kingdom was second with USD 3.8trn, followed by Canada (USD 3.2trn), Australia (USD 2.3trn), the Netherlands (USD 2.1trn), Japan (USD 1.5trn), and Switzerland (USD 1.4trn).

The report detailed that more people had a pension scheme in 2021 than in previous years in most jurisdictions, with an average return of 3 per cent in OECD countries and -0.9 per cent in 37 other jurisdictions.

Contributions to pension schemes increased in 2021, and on average over the last two decades, with the annual average return being positive over the last two decades in 16 out of 18 reporting jurisdictions.

However, the OECD found that benefits paid to retirees was still limited in several countries that set up funded pension schemes recently.

It also found that there had been a shift away from bonds towards equities and other asset classes over the last few decades.

Assets in defined contribution and personal pension schemes were increasing faster than defined benefit (DB) schemes in most countries, while the funding of DB pensions improved in 2021 due to financial gains and a decline in liabilities.

The OECD noted that pension assets had increased faster than GDP over the last two decades, which it said highlighted the importance of retirement savings worldwide.

The ratio between total OECD pension assets and total OECD GDP rose from 59 per cent at the end of 2001 to 105 per cent at the end of 2021.

Denmark was the OECD country with the largest amount of pension assets relative to GDP (233 per cent), followed by Iceland (219 per cent) and the Netherlands (213 per cent).

Commenting, Denmark’s Forsikring & Pension deputy director, Jan V. Hansen, said: “Denmark continues to benefit from the ‘wave from 1987’, where with the Joint Declaration we really spread labour market pensions to the Danes.

“It has been a huge success both for the individual Dane, who has the prospect of more financial security in old age - and for the Danish economy, which would simply have been in a much worse place without the pensions.”

Pension assets had also grown strongly in some non-OECD jurisdictions, exceeding GDP in some cases such as in Liechtenstein (121 per cent) and Namibia (116 per cent).

By contrast and despite some increases, pension assets still accounted for 1 per cent of GDP or less at the end of 2021 in some jurisdictions, such as Albania, Greece and Serbia.

In nominal terms, pension assets grew in all reporting jurisdictions over the last two decades, especially in countries with young funded pension systems, such as Estonia, which had a 31 per cent growth on average per year of the last two decades, Latvia (33 per cent) and Slovakia (54 per cent).

However, this asset growth slowed over the last decade in Estonia (14 per cent on average per year), Latvia (17 per cent) and Slovakia (10 per cent).

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