Global institutional fund assets in the 11 major markets grew by about 9% during 2007 to more than US$25 trillion, says a study.

Watson Wyatt’s Global Pension Assets Study finds that the United States, Japan, the United Kingdom and Canada, respectively, were the largest pension fund markets in 1997 and this remained the case last year. Those four countries now account for 87% of total assets.

In the seven largest markets, the growth of defined contribution (DC) assets has grown significantly over the past decade. DC assets now comprise 44% of global pension assets compared with 34% in 1997.

Australia has the highest proportion of DC pension assets, having increased them to 87% of overall assets from 73% a decade ago.

The countries that show a larger proportion of DC assets than defined benefit (DB) assets are the U.S., Australia and Switzerland while Japan and The Netherlands are close to 100% DB.

“The year when DC assets overtake DB assets is approaching, yet the provision of smart DC investment solutions remains slow and expensive, threatening to under deliver when the time comes,” says Roger Unwin, global head of investment consulting at Watson Wyatt. “However, best practice models from places like Australia are likely to permeate through to other markets via the forces of globalization.”

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