Each year, the OECD looks at the total assets of institutional investment funds – who owns them and where they are invested. PensionReforms has already looked at two such reports – for 2006 here and 2007 here.
All the amounts cited in this abstract are in US dollars.
“All institutional investors in the OECD, including investment funds, insurance companies, pension funds and other entities, experienced growth of their assets in 2012.”
Institutional investors had a total of $78.2 trillion in 2012, broken down as follows:
- $30.0 trillion from investment funds,
- $24.5 trillion from insurance companies,
- $21.8 trillion from pension funds and
- $1.9 trillion from other investors.
“In 2012, pension funds confirmed their growing prominence among institutional investors, with a market share of 28% in terms of total assets held by institutional investors. This share has increased slowly but steadily since 2008 (from 25.7% in 2008 to, 25.8% in 2009, 26.6% in 2010, and 27.4% in 2011).”
“In 2012, private pension systems in the OECD accumulated $32.1 trillion, comprising pension funds (67.9%), banks and investment companies (18.5%), insurance companies (12.8%), and employers’ book reserves (0.8%).”
The overall OECD weighted average asset-to-GDP ratio for pension funds grew from 73.5% of GDP in 2011 to 77.0% of GDP in 2012. The Netherlands again had the largest ratio at 160.2% in 2012.
“In absolute terms, the United States still owned the majority of assets under management of all the OECD countries, with assets worth $11.6 trillion in 2012. In relative terms, however, the weight of assets held by pension funds in the US shrank from 67.6% in 2001 to 53.4% in 2012.”
Other highlights from the report were:
- High returns in 2012 in almost all OECD countries, with a real return greater than 5% in 18 countries;
- In 10 OECD countries, private pension schemes account for one third of benefit provision to current retirees;
- Pension fund net income flow was positive in all the reporting OECD countries;
- Occupational pension schemes remained predominant in 2012 in 14 OECD countries;
- Defined Contribution schemes prevailed in more than half of the OECD countries for which the split of assets between Defined Benefit and Defined Contribution was known;
- Male members were more numerous than women in most countries.
PensionReforms notes that these reports continue to add up the assets without wondering whether the increases are actually a good thing. Politicians (and, perhaps, citizens) in countries reporting an increase in pension assets or that are holding a lot of pension assets (notably The Netherlands at 160% of GDP) may take comfort from these numbers.
However, what will really matter is not so much the scale of pension assets but rather what they are invested in and whether the claims on tomorrow’s economies (that these assets will represent) may be met. In that connection, the fact that about 60% all these assets are in cash or bonds should give their owners pause for thought. (File size 3.7 MB) 702