MELBOURNE, 9 September 2024– The world’s largest 300 pension funds returned to growth in 2023, erasing much of the decline of the previous year. However, the assets of the largest pension funds are still not yet back to their record highs, according to this year’s Global Top 300 Pension Funds report by the Thinking Ahead Institute, in conjunction with Pensions & Investments, a leading U.S. investment publication.
The research highlights high-level trends in the pension fund industry and provides information on the changing composition of the top 300 list of pension funds globally, including the characteristics and investment allocations of these pension funds.
In 2023, the top 300 pension funds’ assets under management (AUM) recorded an increase of 10% to $22.6 trillion compared with AUM of $20.6 trillion at the end of 2022, as markets stabilised somewhat from the high level of global economic uncertainty the previous year. This was a significant turnaround from the 13% fall in assets experienced in 2022.
Growth has remained faster among the biggest schemes, as the top 20 largest pension funds in the world recorded an increase in assets of 12% during the last year, outpacing their smaller peers. This faster growth also holds true over time, with a compound annual growth rate (CAGR) for the last five years of 5.4% for the top 20 pension funds compared to 4.7% for the entire top 300.
The Government Pension Investment Fund of Japan (GPIF) remained the largest pension fund in the world, with AUM of US$ 1.59 trillion, a position it has held since 2002. However, with assets of $1.58 trillion, the Government Pension Fund of Norway is just 0.5% smaller and may claim this top spot next year after recording an impressive 22% growth in assets in the 12-month period.
Jessica Gao, Director at the Thinking Ahead Institute, reflects on key insights from the research: “While it is positive to note a return to growth among the world’s largest pension funds in 2023, the combination of a more uncertain macroeconomic environment and rising geopolitical instability means there is increasing complexity in the investment landscape.
“Last year was characterised by the rising inflation and interest rate environment, both of which have since tapered off; but the outlook is by no means certain. Although the first half of 2024 has offered a degree of stability, uncertainty is still high, with volatility persisting in the global economy, heightened by geopolitical developments including multiple significant elections.”
Ellie Boston-Clark, Co-Head of Governance, Investments Australia at WTW adds: “Australia’s presence in the group of world’s largest pension funds continues to grow with 17 Australian funds in the top 300 in 2023. Whilst AustralianSuper remains the only Australian fund in the top 20, up two positions to 16, there has been a material improvement in ranking for all but one of the seven Australian funds in the top 100, with another two, Rest and HESTA, sitting just outside the top 100 group. We also have a new entrant to the top 300 being Brighter Super who has entered at position 271 following the merger of Suncorp Super into Brighter Super in June 2023.
“We also see a significant growth differential and rankings move between the industry funds from 2022 to 2023 (up three positions on average) and the government-related funds (down eight positions on average). This change is partly due to the maturity cycles of these two groups, with government-related funds typically more mature, as well as ongoing merger activities in industry funds continuing to increase their scale. As fund scale and complexity in the investment landscape continues in the coming years, enhancing governance practices will become of increasing importance to funds looking to differentiate their performance.”
On average, the top 20 largest pension funds globally invested approximately 43% of their assets in equities, 35% in fixed income and 22% in alternatives and cash. There is a significant regional divergence, however, in the asset allocation decisions by these largest schemes. In Asia Pacific, it is fairly balanced with 45% in equities and 48% in bonds. Europe has the lowest weighting to equities at 31% compared to bonds at 58%; while North America has an equity weighting of 45% and just 23% in bonds.
Jessica Gao concludes: “We previously warned of the need to address rising systemic risk, where an entire system (like climate) malfunctions, puts emphasis on the need for forward-thinking and re-positioning strategy.
“Since setting the first net-zero commitments in 2020, the asset management industry has faced this challenge under significant time pressure. Four years later, it has developed into a state that is emergent but unfortunately not yet fully formed.”
| Rank | Fund | Market | Total assets |
|---|---|---|---|
| 1 | Government Pension Investment | Japan | 1,593,141 |
| 2 | Government Pension Fund | Norway | 1,584,524 |
| 3 | National Pension | South Korea | 801,864 |
| 4 | Federal Retirement Thrift | U.S. | 782,835 |
| 5 | ABP | Netherlands | 552,376 |
| 6 | Canada Pension | Canada | 477,676 (1) |
| 7 | California Public Employees | U.S. | 452,453 |
| 8 | Central Provident Fund | Singapore | 432,509 |
| 9 | National Social Security | China | 364,351 (2) |
| 10 | California State Teachers | U.S. | 309,931 |
| 11 | PFZW | Netherlands | 262,261 |
| 12 | New York City Retirement | U.S. | 247,999 |
| 13 | Employees Provident Fund | Malaysia | 247,268 |
| 14 | New York State Common | U.S. | 246,307 |
| 15 | Local Government Officials | Japan | 226,803 |
| 16 | AustralianSuper | Australia | 204,631 (3) |
| 17 | Florida State Board | U.S. | 194,659 |
| 18 | Ontario Teachers | Canada | 186,897 |
| 19 | Texas Teachers | U.S. | 181,656 |
| 20 | Labor Pension Fund | Taiwan | 176,267 |
| 2023 rank | 2022 rank | Fund | Total assets |
|---|---|---|---|
| 16 | 18 | AustralianSuper | $204,631* |
| 22 | 21 | Australian Retirement Trust | $173,844* |
| 25 | 26 | Future Fund | $144,312 |
| 37 | 41 | Aware Super | $109,927* |
| 58 | 67 | UniSuper | $84,915* |
| 80 | 84 | HOSTPLUS | $64,078* |
| 87 | 99 | Cbus | $56,984* |
| 102 | 109 | HESTA | $51,638* |
| 103 | 107 | REST | $51,293* |
| 136 | 132 | CSC | $41,300* |
| 197 | 174 | State Super | $28,509* |
| 209 | 205 | GESB | $26,741* |
| 234 | 222 | ESSSuper | $24,556* |
| 239 | 231 | Super SA | $24,270* |
| 261 | 255 | EquipSuper | $21,820* |
| 271 | - | Brighter Super | $20,886* |
| 296 | 292 | Spirit Super | $18,919* |
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and asset managers committed to mobilising capital for a sustainable future. It has 52 members around the world and is an outgrowth of the WTW Investments’ Thinking Ahead Group which was set up in 2002. Learn more at Thinking Ahead Institute
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