Global list of biggest pensions exposes Britain's flawed retirement plan By Andrew Oxlade

Two countries have half the world's retirement wealth. Britain has only one fund in the top 50 - but the BBC nearly makes the top 200. Andrew Oxlade offers lessons from the top 300

The BBC has the 205th largest pension fund in the world Photo: AP

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Reports on the pensions industry can be dull and are easily overlooked.

One such study published last week attracted few headlines yet offered wonderful insights.

The world’s 300 largest pension schemes, a study put together by Towers Watson, allowed for interesting conclusions to be drawn on who owns the world’s retirement wealth – and what that says about how each country will meet future pension costs.

First, I was surprised that only one British scheme made the top 50: BT Group which has accumulated $68bn to ensure it can pay employees past and present sufficient retirement income.

The next biggest British pensions were the Universities Superannuation Scheme, with big banks’ and utility companies’ schemes close behind.

BT may have only just made the top 50 but lower sections of the list were loaded with UK pensions.
The BBC, with around 20,000 employees, nearly made the top 200 thanks to its $20bn warchest. That size sets it up for an intriguing comparison with Tesco, with 500,000 workers, yet much further down the list due its mere $15.5bn fund.
The geographical spread of assets is fascinating. The US and Japan sit on half of the world’s retirement wealth: America has 38pc, Japan has 12pc.
Next is the Netherlands. It has only 17 million citizens (0.23pc of the world population) but holds 7pc of pension assets.Norway and Canada are close behind with 6pc each.
You may have begun to work out why, and certainly glancing the tables below helps. The countries punching above their weight do so because they have created pension funds to pay future pensioners and retired state workers. Holland has the $418bn ABP scheme for its 2.8m public sector employees while Norway’s $844bn sovereign fund will pay all its pensioners. Even the US has the $422bn Federal Thrift fund.
This isn’t to pretend that there aren’t problems with some of the large pensions, such as whether they can afford promises made, but what the data successfully highlights is that some countries are better prepared than others.
The UK has very few such funds. The plan is to pay both state pensions and some public sector workers’ pensions out of future tax. Yet despite this, the UK is 6th in terms of assets, with 5pc of the total. Why?
It’s a remnant of our once widely-admired final salary pension system. These schemes are now only for the lucky few. Younger generations must save for themselves into “defined contribution” (DC) schemes, where investment returns decide pension size.
DC schemes make up just 21pc of global retirement assets.
My conclusion from the report is that with no public sector pension to look forward to and higher taxes ahead, I should save more, and in places that offer the most protection from the taxman. That means Isa saving rather than pension saving, as pension income is taxed.
andrew.oxlade@telegraph.co.uk
Biggest pension funds  Photo: Towers Watson
<sup>N/A: Not available at the time or not ranked within the top 300 in 2004 

Culled from Telegraph</sup>