5/2/2009
By Sophie Baker
Allianz Global Investors has published a study examining the development of the pension systems and markets in 17 Western European countries.
Funded Pensions in Western Europe 2008 shows that, by 2020, the assets of pension funds and life insurance companies in Western Europe is expected to hit €16.9trn. This is predicted from the level in 2007 of €8.6trn, with a 5.3 per cent growth rate.
The countries found to be in the greatest need of reform, according to the Allianz Pension Reform Pressure Gauge, were Greece, Portugal, Spain, Luxembourg, Belgium and Italy. The UK, Sweden, Denmark, the Netherlands and Switzerland were found to have the most sustainable systems. The Gauge examines the sustainability of a country's pension system.
"For the United Kingdom, Sweden, Denmark, the Netherlands and Switzerland, our Pension Pressure Gauge indicates only moderate pressure to reform," commented Brigitte Miksa, head of international pensions at Allianz Global Investors AG. "This is due to two reasons. First, ageing is less pronounced as it is the case elsewhere in Western Europe.
Second, and more important, these countries have pension systems with a well-developed funded pillar and a lower level of state pension."
Nine governments of those surveyed were found to have established state pension reserve funds to support the public pension pillar in the future, with these funds valued at €515bn in 2007. The investment strategies of these funds, however, vary greatly. Alexander Boersch, senior pension analyst at the organisation, said: "While some funds invest only in domestic bonds or exist only in the government books, others pursue very sophisticated investment strategies with a focus on diversification."
Boersch said that the French, Irish and Norwegian reserve funds are perfect examples of this, with the adoption of socially responsible investing (SRI) principles. He said this "is to be highlighted as this will help to establish SRI as a mainstream rather than a niche strategy. The French and Norwegian funds are especially active in this area," he concluded.
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