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FIAP > Boletín – Otras Publicaciones > Beyond their borders: evolution of foreign investment by pension funds – PwC Luxembourg – September 2015
29 March, 2016

Beyond their borders: evolution of foreign investment by pension funds – PwC Luxembourg – September 2015

The report examines the critical role played by pension funds in the global economy. Pension plans currently comprise vital financial resources for millions of people.

The salient points in the report are the following:

(i) Individuals must make ever greater efforts to transform their financial assets into retirement income, which points to the rate of population aging as one of the main challenges facing pension systems.

(ii) There is a need for diversification in pension plans, by asset class and geographical exposure, with investment in foreign assets being one of the most effective ways of achieving diversification objectives;

(iii) Regulatory restrictions can affect the proportion of assets that pension plans can invest abroad.

(iv) Global pension fund assets grew to US$ 37.6 billion in 2014.

(v) There is a predominant bias towards equities in the global distribution of pension fund assets, with 44% of the total assets invested in shares, 28% in bonds, 26% in alternative assets, and 2% in money markets, at the end of 2014.

(vi) In terms of absolute growth, the asset class that most grew globally within pension funds investment portfolios, was alternative assets.

(vii) As a result of a greater need for diversification, foreign investment of the pension funds of most OECD countries (excluding the United States) grew significantly in the six-year period covered by the study. Whereas foreign investment stood at about 25% of the total assets of pensions in 2008, it increased to 31% in 2014.

In order to review the full report, please download it here.

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