Pension Plans

A retirement plan that requires the employer to make contributions to a pool of assets set aside for a workers future benefit. 

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The plan must be managed to ensure its employees receive the benefits as promised. Focus on net inflows and seek liquidity in down markets to make payments to its beneficiaries.

Types of Pension Plans

Public Pension Funds

  • Often rely on investment consultants and RFPs for asset allocation

Private Pension Funds

  • Often have internal investment teams that make allocation decisions on behalf of its employees

Major Considerations

  • May prefer larger established GPs

  • Potentially larger investment commitments

  • Some have allocations for emerging managers

  • Prefer stable returns and low volatility

  • Can be a source for patient long-term capital

  • RFPs and long due-diligence processes

Typical Allocation

  • Alternative Asset Breakdown (% of total AUM):

  • Real Estate: 6%

  • Private Equity: 5%

  • Infrastructure 2%

  • Other Alternatives: 1.5%

  • Commodities: 0.6%

 

How do Public Pension Plans invest? State Street Global Advisors

Largest Pension Plans

  • Government Pension Investment Fund, Japan (Public) AUM – 1.5T

  • TIAA, New York (Private) AUM – 1T

  • National Pension Service, South Korea (Public) AUM – 612Bn

  • ABP, Netherlands (Public) AUM – 570Bn

  • CPP Investment Board, Canada (Public) AUM – 402Bn

  • CalPERS, California (Public) AUM – 375Bn

  • Stitching Pensioenfonds Zorg en Welzijn, Netherlands (Public) AUM – 267Bn

  • Chunghwa Post, Taiwan (Public) AUM - 250Bn

  • CDPQ, Canada (Public) AUM – 250Bn

  • CalSTRS, California (Public) AUM – 226Bn

 

PreQin 2020

 

THE LARGEST RETIREMENT FUNDS; Pensions and Investments

 

 

Articles of Interest

PENSION FUND RETURNS TRACKER; Pensions and Investments

PUBLIC PENSION FUND LOSSES SET RECORD; Wall Street Journal

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