Dive Brief:

• Total assets of the world’s largest 300 pension funds grew by over 3% in 2014 (compared to around 6% in 2013) to reach a new high of over $15 trillion, according to Pensions & Investments (P&I) and Towers Watson research. 
• Ten years ago, total assets at the world’s largest pension funds grew by 27% to reach $8.4 trillion and move above the previous high of $6.6 trillion, reached in 2003.
• The Towers Watson global 300 research, conducted in conjunction with P&I, a leading U.S. investment newspaper, shows that by individual region, North America had the highest five-year combined compound growth rate, around 8%, compared to Europe (over 7%) and Asia Pacific (around 4%). The research shows the world’s top 300 pension funds now represent around 43% of global pension assets

Dive Insight:

Steve Carlson, head of Investment, Americas, at Towers Watson, said that despite significant asset growth over the past decade, there is growing sentiment that the investment industry has not focused enough on the end beneficiaries’ needs or on managing costs in the "investment food chain."

“Instead," Carlson says, "the industry has focused on relative returns over total returns and has allowed excessive risk to build up in portfolios, while costs have increased to a level that is far higher than can be justified in aggregate. The top funds are moving to address this and related issues."

Given the shift to defined contribution plans (employees primarily fund their own pensions), where the end beneficiary comes first, HR executives and benefits professionals can expect a very different industry in 10 years’ time or sooner, Carlson says.