Net pension assets rose 9.5 percent last year among 13 countries

If anyone needed more evidence that last year was a good one for retirement assets, the latest Towers Watson peek at 13 countries around the world should leave no doubt.

The report found that total net pension assets rose 9.5 percent to about $32 trillion dollars, with 59 percent of the total in the U.S.

Pension funds around the world rode a wave of rising stock prices and interest rates in 2013. After the U.S., where assets rose 12 percent to $18.9 trillion, were Japan  with 10.2 percent of assets, and the United Kingdom, with 10.1 percent.

“During 2013, equities enjoyed their best calendar year of risk-adjusted returns since the financial crisis, and as a result, U.S. pension funds are in their best shape in many years,” said Chris DeMeo, head of Investment for the Americas, Towers Watson, in a statement. ”Generally, U.S. pension funds are now implementing investment strategies that are more flexible and adaptable, and contain a broader view of risk to make greater allowance for the sort of extreme economic and market volatility they have experienced during the past five years.”

As a share of GDP, pension assets now equal 83 percent, up from 57 percent in 2008. For the U.S., the percentage of GDP reached 113 percent at the end of 2013.

The shift from defined benefits plans to defined contribution systems continued last year. Towers Watson noted that 47 percent of U.S. retirement assets are in defined contribution plans and even countries like the Netherlands, Japan and Canada, which have heavily tilted toward defined benefit plans, are seeing a shift. In 2003, just 38 percent of assets were in DC plans.

Although asset allocations differed among countries, 2013 saw a shift to more equities and fewer bonds being held in investment portfolios. The U.S., Australia and the U.K. had higher equity holdings than any of the other seven largest countries.

For the top seven markets, which have the bulk of total worldwide assets, the report found that two-thirds were in private sector plans. In the U.S., the split was 84 percent to 16 percent in favor of private plans. Only Canada and Japan had more assets in public plans than in private ones.

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