Pension reform across the Asia-Pacific region is driving growth in assets, according to a study by Allianz Global Investors, an asset management company.
Allianz Global Investors conducted a major study of pensions markets in nine developed and emerging economies. As per the study, old-age dependency ratios in most Asia-Pacific markets will worsen between now and 2050, due to falling fertility rates and increasing longevity. In response governments have introduced defined contribution (DC) pension plans – or are planning to do so in the near future.
As a result, pension assets in the region are expected to increase by a 9.2% compound annual growth rate, raising assets under management to E3,116 billion by 2015, from E1,407.5 billion in 2006.
The dramatic trend towards funded DC plans presents major opportunities to domestic and global financial institutions active across the region. Outsourcing of asset management on the part of public pension funds is on the increase.
The study said that with the rapid growth of DC plans across the region, individual investors are directly exposed to the financial markets, in many cases for the first time. This places a responsibility on governments and financial institutions to improve governance and financial literacy, so that individuals can make informed decisions within a secure framework.
Joachim Faber, member of the board of management of Allianz SE and CEO of Allianz Global Investors, said: There are tremendous opportunities in this region for financial institutions that can deliver a wide range of services, including asset management, life and health insurance and banking.