Current AuM Figures for Private Pension Validate Multi-Pillar Theory of Pension System Resilience

Current AuM Figures for Private Pension Validate Multi-Pillar Theory of Pension System Resilience

Recent reported growth of private pension funds, otherwise known as defined contribution pension systems, in the OECD member countries is impressive, enhancing the resilience and sustainability of pension systems in countries where they are provided.

Assets in funded pension (DC pension) systems continued to grow overall in 2021, reaching USD 60 trillion at end-2021. This is nearly twice more than at end-2011 (USD 30.0 trillion) and nearly four times at end-2001 (USD 15.3 trillion), despite several events and shocks in financial markets over the last two decades.

Reaching 100% and exceeding 200% of GDP figures in a number of countries, private pensions are not only making retirement systems more resilient but also reinforcing their principal role as significant sovereign-quality asset allocators and growth engines for local economies.

The continuity of private pensions for more than three decades now and the record-high growth of their assets is a compelling evidence that the OECD and World Bank’s multi-pillar pension model is working, allowing for diversification of funding sources for retirement income and building sustainability.

Private (or DC) pension systems have managed to achieve all of this while complementing, rather than substituting, pay-as-you-go government-run public pension funds.

These and other key messages were showcased this week at a Fintech Robos’ pension event launching the OECD Pension Outlook 2022 for the MENA region. The webinar was aimed at sharing the OECD countries’ experience with defined contribution (DC) pension systems with the Arab pension industry.

“Pensions Outlook” is one of two flagship bi-annual international pension reports and indexes produced by the Organisation of Economic Cooperation & Development (OECD) that provide detailed insights and recommendations on the design, implementation and operations of pensions system, both by the public and private sectors.

The event was a great opportunity for leaders and specialists of government pension funds, pension regulators, pension savings regimes, corporate employee pension funds, life insurance companies providing pension solutions, actuaries and economists who are looking to set up new pension schemes or products, or innovate in the space of national pension infrastructure.

Leading OECD pension experts and authors of the “Pension Outlook 2022”, which include Pablo Antolin, Principal Economist at OECD’s Private Pension Unit, and Jessica Mosher and Stephanie Payet, both Policy Analyst at the OECD Private Pension Unit, have presented their findings and insights in a lively interactive forum.

This edition of the OECD Pensions Outlook, published in December 2022, focuses on insights and best practice for designing, implementing managing non-guaranteed lifetime retirement income (defined contribution pension) arrangements. In the past three years, OCED and Fintech Robos launched the “Pensions Outlook 2020” along with the “Pension at a Glance 2021” Reports in the MENA region, from Bahrain.