Towers Watson: DC Assets Will Overtake DB Assets in Next Few Years

401k jar

A Towers Watson study has found that global defined-benefit pension fund assets are at an all-time high – $36 trillion – but defined-contribution assets could soon overtake them.

From a press release:

The Towers Watson study also shows that defined contribution (DC) assets grew rapidly for the 10-year period ending in 2014, with a compound annual growth rate (CAGR) of 7%, versus a rate of over 4% for defined benefit (DB) assets. As a result, DC plan assets have grown from 38% of all pension assets in 2004 to 47% in 2014 and are expected to overtake DB assets in the next few years. In the U.S., DC assets continued to climb steadily and now represent 58% of all assets, up from 52% in 2004 and 55% in 2009.

“The continuing shift to DC plans means they are becoming the world’s most prevalent retirement savings model,” said Steve Carlson, head of Towers Watson’s Americas Investment practice. “This shift brings a transfer of risk and new tension to the balance between ownership and control, which will test governments and pension industries around the world.”

The study found that only two countries had more DC assets than DB assets: the United States and Australia.

As mentioned in the excerpt above, DC assets represent 58 percent of all U.S. pension assets.

The trend is more pronounced in Australia, where DC assets represent a whopping 85 percent of all pension assets.


Photo credit: