Global pension assets continued to grow in 2024, exceeding the previous record set in 2021 and fully offsetting the losses experienced in 2022, data from the Organisation for Economic Co-operation and Development (OECD) has revealed.

The preliminary findings for the group's annual Pension Markets in Focus report showed that assets in pension plans grew by 8.5 per cent in the OECD and by 3.1 per cent in a group of non-OECD jurisdictions in 2024.

In total, assets reached USD 61.5trn in the OECD at end-2024, up from USD 59.7trn at end-2021. Taking into account participating non-OECD jurisdictions, assets totaled USD 63.1trn at the end of 2024.

However, the OECD pointed out that total asset growth remained lower than GDP growth (in USD) in the OECD area over 2021-24, with assets equivalent to 92 per cent of GDP at the end of 2024, down from 105 per cent at the end of 2021.

Nevertheless, it found that a third of non-OECD jurisdictions still saw asset growth above 20 per cent, and nearly all reporting jurisdictions reported some growth in assets.

And there was particular growth amongst some OECD countries, as assets grew the fastest in the Baltics, Greece and the Republic of Türkiye, increasing more than 20 per cent in nominal terms and national currency.

Whilst asset growth was more moderate in large pension markets, the OECD emphasised that it was still significant, with 10.3 per cent growth in Australia, 10.6 per cent growth in Canada, 8.2 per cent growth in the Netherlands, and 5.3 per cent growth in the United Kingdom.

The United States remained the country with the largest amount of pension assets in USD at end-2024, at USD 42.9trn, while Denmark had the largest amount relative to the size of its economy (over twice the amount of GDP at end-2024).

Assets declined in only three out of the 73 reporting jurisdictions: Portugal, which saw a modest decline of 0.9 per cent, Guyana, largely attributable to the change in the fair value of equity investments, and Peru, which was due to the seventh early withdrawal of funds in 2024.

The OECD's analysis suggested that, in several jurisdictions, asset growth in 2024 was the result of increasing contributions, driven by increases in the number of individuals participating in pension plans.

In Türkiye, for instance, average monthly contributions increased by 57 per cent, whilst in Estonia the number of members of voluntary pension plans increased by 5.5 per cent, while the number of members of workplace pension plans remained stable.

In addition to this, assets in the Slovak Republic increased by nearly 20 per cent in 2024, after the number of people participating in workplace pension plans increased following the introduction of automatic enrolment in 2023.

However, it was not just contribution gains, as the OECD found that pension providers recorded widespread investment gains in 2024, with investment rates of return exceeding inflation in most jurisdictions.

The data showed that pension plans achieved a positive real investment rate of return in 27 out of 29 reporting OECD countries, and in 26 out of 33 non-OECD reporting jurisdictions.

Among OECD countries, investment rates of return were the highest in real terms in Estonia (11.3 per cent), the Slovak Republic (11.1 per cent), Lithuania (10.8 per cent), and Israel (10.1 per cent).

Real investment rates of return also exceeded 10 per cent in 2024 in Kazakhstan and Pakistan.

In addition to this, the OECD found that pension providers recorded positive nominal investment rates of return in nearly all jurisdictions in 2024, with a nominal investment rate of return close to 10 per cent in some of the largest pension markets.

Guyana was the only participating jurisdiction with a negative nominal rate of return, which the OECD attributed to the significant market value depreciation of equities and the unavailability of high-quality long-term investment instruments domestically, compounded by the statutory limit on foreign investments.

The OECD's data suggested that the positive performance of pension providers was a reflection of rising valuations in equity markets worldwide.

Indeed, the OECD pointed out that global equities delivered positive returns for the second year in a row, with the MSCI World Index growing again by close to 20 per cent in 2024.

Although the asset mix varies across countries, pension providers that had the highest real investment rates of return in 2024 in the OECD, as countries such as Estonia, Lithuania and the Slovak Republic had over 60 per cent of assets in equities, far more than most other jurisdictions.

Pension funds in Poland represent an exception, with a relatively low nominal rate of return (negative in real terms) despite a high proportion of assets in equities, as the main local equity index rose by less than 2 per cent in 2024.

However, the OECD admitted that pension providers may have achieved more mixed results on their bond holdings.

It explained that despite the easing of inflationary pressures and the recent decline in short-term policy rates, the average yields to maturity of government bonds remained stable, with government bond yields of different maturities evolving differently around the world in 2024.

---