Pension fund assets in the 13 major markets across the globe increased by 15 per cent over 2009, shows Towers Watson's Global Pension Assets Study.

2009 saw assets grow from US$20trn to over US$23trn, compared to the 21 per cent fall in values over 2008. The balance sheet for the global pensions examined in the study, measured by asset values over liability values using sovereign bonds to discount liabilities, also strengthened by around ten per cent in 2009.

Pension assets now amount to 70 per cent of the average global GDP, compared to 58 per cent in 2008, although six per cent lower than 1999's values.

"The global financial crisis was a huge wake-up call and problems of poor systemic design in the industry point to increased likelihoods of further periods of financial distress in future," commented Roger Urwin, global head of investment content at Towers Watson. "While the recovery of markets will be welcomed, it is hoped that it will not stifle recognition of these as major issues for governments and companies to address. I fear that without exceptional leadership we will have another tough decade in the pension and investment world."

The report also showed that the seven largest pension markets (P7) recorded increases in bond allocations from 32 per cent in 2008 to 54 per cent. Real estate, hedge funds, private equity and commodities also grew from 12 per cent to 17 per cent in the last five years.

"The gyrations of markets during the past few years have presented pension funds with very difficult strategic asset allocation choices. During the crisis, some funds sold out of equities to address solvency issues, some drifted out of equities and into bonds by not replacing, while others maintained their strategic mix and rebalanced to prior equity percentages. The result overall was a phase of de-risking, but not in a measured way and this has largely been reversed as equity markets have rebounded and risk allocations rebuilt," added Urwin.

Defined contribution (DC) assets comprised of 42 per cent of global pension assets in 2009, compared to 32 per cent ten years before.

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