The Markets September 6, 2017

U.S. Top-Ranked in Global Pension Assets

Willis Towers Watson finds North American funds showed the most noticeable annualized growth rate over the last five years.
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Assets under management at the world’s largest pension funds increased in value by 6.1% in 2016, representing a total of $15.7 trillion, according to the latest global 300 research from Willis Towers Watson.

The figures for year-end 2016 show a return to growth, following a 3.4% decline in 2015, while cumulative growth in assets since 2011 now stands at 23.4%. The top 20 funds by asset size in the research experienced a higher increase than the overall ranking, growing assets by 7.1% over the period. The research shows that the world’s top 300 pension funds together now represent 43.2% of global pension assets, rising from 42.5% in 2015, as estimated against figures from Willis Towers Watson’s Global Pensions Asset Study.

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According to the research, North American funds showed the most noticeable annualized growth rate over the last five years, growing by 6.7% during the period. The U.S. continues to hold its position as the country with the largest share of pension assets across the top 300 funds, representing 38.6% spread across 134 funds.

A total of 28 new funds have entered the ranking over the last five years, with the U.S. contributing the most new funds (13) on a net basis. The U.S. has the largest number of funds within the top 300 ranking (134).

Globally, defined benefit (DB) assets increased by 5.6% in 2016, compared with 9.6% for defined contribution (DC) plans, 3.9% for reserve funds and 2.9% for hybrid funds. DB assets account for 65.5% of the disclosed total advanced utilization management, down from 65.9% in 2015, while DC assets have increased their share, rising from 21.5% in 2015 to 22.2%. Reserve funds remain relatively unchanged at 11.5% (11.7% in 2015), as do hybrid funds (0.8%, falling from 0.9% in 2015).

Among the top 20 global pension funds are the U.S. Federal Thrift Savings Plan, with $485,575,000 in assets; the California Public Employees Retirement System (CalPERS), with $306,333,000 in assets; the California State Teachers Retirement System (CalSTRS), with $193,871,000 in assets; the New York State Common Retirement Fund, with $184,461,000 in assets; the New York City Retirement Fund, with $171,574,000 in assets; the Florida State Board Retirement System, with $153,942,000 in assets; and the Texas Teachers Retirement System, with $133,321,000 in assets.

“The search for attractively priced assets at acceptable risk continues to be a driving force in shaping the fortunes of pension funds and their ability to meet respective missions and objectives,” says Steve Carlson, head of Investment, North America, Willis Towers Watson. “This is increasingly hard and reduces the shine from a year in which the largest asset owners have been able to achieve superior growth. Central to this result has been the ability of leading asset owners to adapt to the ever-changing investment environment, through improvements in governance and the ability to learn from their peers. The desire of asset owners to implement best practices and sound governance has strengthened and will be a key factor in their future success.”

Data & Research September 6, 2017

Provider Education Resources Enter the 21st Century

Of the 36 education topics identified by a recent survey, 50% of the firms cover more than half of the topics, and 33% cover beyond two thirds.
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The Retirement Plan Monitor report from Corporate Insight suggests retirement plan provider firms have consistently introduced new, higher quality resources to participant websites, and many of the firms tracked by the research now provide “engaging resources across a variety of mediums.”

These resources cover “comprehensive selections of retirement topics,” Corporate Insight reports. “Of the 36 topics identified, 50% of the firms in this report cover over half of the topics, and 33% cover over two thirds.” The most common topics for firms to cover include investment types (100%), defined contribution plans and Social Security (89% each) as well as investment styles/risk profiles, loans, rollovers and contribution basics (83% each). “Impressively, half of firms provide interactive lessons or tutorials, and videos are the most common content medium.”

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As laid out by the Corporate Insight research, the proliferation and evolution of retirement educational resources continue to be among the most prevalent trends within the digital retirement space. Since the beginning of 2016, 17 firms within the Retirement Plan Monitor coverage set have introduced new retirement readiness resources to participant sites—and 12 of those firms have done so in this year alone.

“Many have unveiled excellent selections of curriculum-based lessons or tutorials,” the research finds. Some providers have even launched modules consisting of “animated, interactive slides that include videos and gamification elements” and provide thorough coverage of broader topics beyond just retirement planning.

The analysis highlights one provider that, at the start of this year, introduced a “Retirement City Game,” described by researchers as “a resource that exemplifies the trend of engaging, interactive educational resources. Participants start as 23-year-olds and complete challenges by answering multiple choice questions, playing mini games, watching videos, using educational tools and learning trivia. To increase engagement through the spirit of competition, when participants answer questions or play games, they are shown the percentage of other users who answered correctly or the average user score, respectively.” The game also takes steps to encourage action.

While the presentation of materials varies quite a bit across the providers considered, there is more uniformity concerning the topics covered. More than two-thirds of firms offer materials on understanding and comparing defined contribution plans, individual retirement accounts (IRAs) and Roth accounts. After these topics, there is a significant drop off in uniformity, however, with less than one-third covering annuities and health savings accounts (HSAs) and only one firm offering resources on pensions.

More information from the latest Retirement Plan Monitor report, including individual rankings and analysis of top providers, is available here. 

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