A study by Watson Wyatt has shown that global pension funds have decreased by almost 19% in 2008.
After a five year growth rate of 12% p.a. the decline has come as surprise. The global pensions balance sheet has also gone down by 29% as a result of the effects of poor performing assets and lower government bond yields.
To meet the demographic crunch ahead, countries need the advanced funding of pensions to grow relative to the size of their economies. This data shows a worrying picture. While this decline is offset in some countries by the development of sovereign wealth funds, we should remember that SWFs amount to only around a tenth of the size of global pension fund assets. This is a wake-up call for governments worldwide to engineer bigger allocations to pension savings, says Roger Urwin, global head of investment content at Watson Wyatt.
SA