The world’s largest pension funds saw assets increase by 8.9 per cent in 2021, according to a report by WTW’s the Thinking Ahead Institute.
The report, which drew on data from the 300 largest pension funds in the world, found these funds’ combined assets under management reached US$23.6 trillion by the end of 2021. The 20 largest pension funds, a group that includes the Canada Pension Plan Investment Board (ranked 7th) and the Ontario Teachers’ Pension Plan (ranked 18th), accounted for 41 per cent of the total AUM, down 0.8 per cent from the previous year.
In its analysis of the results, the institute noted pension fund strategies focused more on environmental, social and governance issues, particularly sustainability, during the year. “The industry is stepping up its ESG and pension funds are pursuing more strategic engagements, building more effective coalitions and implementing more sophisticated portfolio solutions. While most of the industry is managing climate-related risk in portfolios, the shift to real-world impact is still in its embryonic stages.”
With average gains of 9.2 per cent, North American pension funds outperformed their global peers. European and Asia-Pacific funds saw subpar growth, averaging 8.3 per cent and eight per cent, respectively.
There were 18 Canadian pension funds on the list, accounting for six per cent of the total assets under management — about US$1.23 trillion — more than any other country, except the U.S. and the U.K.
About 63.5 per cent of total assets were in the custody of defined benefit plans. Defined contribution plans controlled 23.8 per cent of the assets, reserve funds another 11.8 per cent and hybrid funds just 0.9 per cent.