Private pension plans in OECD countries attained a record level of 32 trn EUR at the end of 2016. Pension asset growth has outpaced GDP growth in most countries with total pension assets even exceeding total GDP in many cases.

Pension providers mostly invest directly in bills, bonds or shares but in some countries like Belgium, Luxembourg, the Netherlands and Switzerland, pension fund managers invest in these asset classes indirectly through collective investment schemes (funds).

Net real return (net of investment expenses) was above 2% on average. Returns were also positive over the past 10 years with most countries recuperating the losses from the financial crisis.

The current low-interest rate environment continues to exert pressure on pension providers through lower yields on the bond portion of their portfolio investments. Pension funds could achieve higher returns without an undue increase in risk through well-diversified asset allocation.

Source: 2017 OECD report on pension markets (covering 85 OECD countries). Read more

Real investment rate of return of pension providers, net of investment expenses, Dec 2015-Dec 2016.

Source: 2017 OECD report on pension markets