A
pension fund is a pool of assets forming an independent legal entity that are bought with the contributions to a
pensionIn general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income...
plan for the exclusive purpose of financing pension plan benefits.
Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large
institutional investorInstitutional investors are organizations which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds. Their role in the economy is to act as highly specialized investors on behalf of others....
s like the
Ontario Teachers' Pension PlanThe Ontario Teachers' Pension Plan , commonly referred to as Teachers, is the organization responsible for administering pensions for public school teachers of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment groups currently...
dominate. The largest 300 pension funds collectively hold about $6 trillion in assets.
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A
pension fund is a pool of assets forming an independent legal entity that are bought with the contributions to a
pensionIn general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income...
plan for the exclusive purpose of financing pension plan benefits.
Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large
institutional investorInstitutional investors are organizations which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds. Their role in the economy is to act as highly specialized investors on behalf of others....
s like the
Ontario Teachers' Pension PlanThe Ontario Teachers' Pension Plan , commonly referred to as Teachers, is the organization responsible for administering pensions for public school teachers of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment groups currently...
dominate. The largest 300 pension funds collectively hold about $6 trillion in assets. In January 2008,
The EconomistThe Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in an office in the City of Westminster, London. Continuous publication began under founder James Wilson in September 1843. While The Economist calls itself a...
reported that
Morgan StanleyMorgan Stanley is a global financial services provider headquartered in New York City, New York, United States. It serves a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 33 countries around the world with 600 offices, with...
estimates that pension funds worldwide hold over US$20 trillion in assets, the largest for any category of investor ahead of mutual funds, insurance companies, currency reserves, sovereign wealth funds, hedge funds, or
private equityIn finance, private equity is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange. Investments in private equity most often involve either an investment of capital into an operating company or the acquisition of an operating company...
.
Open vs. closed pension funds
Open pension funds support at least one pension plan with no restriction on membership while closed pension funds support only pension plans that are limited to certain employees.
Closed pension funds are further subclassified into:
- Single employer pension funds
- Multi-employer pension funds
- Related member pension funds
- Individual pension funds
Public vs. private pension funds
A public pension fund is one that is regulated under public sector law while a private pension fund is regulated under private sector law. In certain countries the distinction between public or government pension funds and private pension funds may be difficult to assess.
Government
- Public Sector Supperannuation Scheme (for federal
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
civil servants)
- Commonwealth Supperannuation Scheme (older scheme for federal civil servants)
- State Super (for New South Wales
New South Wales is Australia's most populous state, located in the south-east of the country, north of Victoria, south of Queensland and east of South Australia...
stateThe Commonwealth of Australia is made up of six states and two major mainland territories. There are also lesser territories that are under the administration of the federal government.- States and Territories:+ Formerly part of ACT...
civil servants)
Private
- The Retail Employees Superannuation Trust (Australia's largest superannuation fund by membership)
- ANZ Australian Staff Superannuation Scheme (for employees of ANZ Bank
The Australia and New Zealand Banking Group Limited , commonly called ANZ, is the fourth largest bank in Australia, after the Commonwealth Bank, the National Australia Bank, and Westpac Banking Corporation. Australian operations make up the largest part of ANZ's business, with commercial and retail...
)
Government
- Caisse de dépôt et placement du Québec
The Caisse de dépôt et placement du Québec manages public pension plans in the Canadian province of Québec. It was founded in 1965 by an act of the National Assembly...
- Canada Pension Plan
The Canada Pension Plan is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security...
- Alberta Investment Management
Alberta Investment Management Corporation is one of Canada's largest institutional investment fund managers. Established as a crown corporation on January 1st, 2008, it manages nearly C$70 billion on behalf of the province of Alberta...
Private
- Ontario Teachers' Pension Plan
The Ontario Teachers' Pension Plan , commonly referred to as Teachers, is the organization responsible for administering pensions for public school teachers of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment groups currently...
(union-controlled)
- Hospitals of Ontario Pension Plan (HOOPP)
- OMERS Administration Corporation (OMERS)
The Netherlands
- Stichting Pensioenfonds ABP
Stichting Pensioenfonds ABP , frequently referred to as ABP, is the pension fund for government and education employees in the Netherlands...
(ABP)
- Stichting Pensioenfonds Zorg en Welzijn
Stichting Pensioenfonds Zorg en Welzijn is the second largest pension fund in the Netherlands...
(PFZW, formerly PGGM)
NorwayNorway , officially the Kingdom of Norway, is a country in Northern Europe occupying the western portion of the Scandinavian Peninsula, as well as Jan Mayen and the Arctic archipelago of Svalbard under the Spitsbergen Treaty...
- The Government Pension Fund - Global (Statens pensjonsfond - Utland)
- The Government Pension Fund - Norway (Statens pensjonsfond - Norge)
Government
- California Public Employees' Retirement System (CalPERS)
The California Public Employees' Retirement System is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families"...
- California State Teachers' Retirement System (CalSTRS)
The California State Teachers' Retirement System provides retirement, disability and survivor benefits for California's 833,000 prekindergarten through community college educators and their families...
- Federal Retirement Thrift Investment Board
The Federal Retirement Thrift Investment Board was established as an independent agency of the United States government by the Federal Employees Retirement System Act of 1986. It is one of the smaller executive branch agencies, with just over 80 employees...
- Fire and Police Pension Association of Colorado (FPPA)
- Illinois Municipal Retirement Fund
The Illinois Municipal Retirement Fund is a pension fund created in 1939 by the Illinois General Assembly for municipal employees in the state of Illinois. IMRF began operating in 1941 with 5 original employers and $5,000 in assets...
- Kansas City Public School Retirement System (KCPSRS)
- Kansas Public Employees Retirement System (KPERS)
- Minnesota Public Employees' Retirement Association (MNPERA)
- Minnesota Teachers' Retirement Association (MNTRA)
- New York State Teachers' Retirement System (NYSTRS)
- Retirement Systems of Alabama
Retirement Systems of Alabama is the administrator of the pension fund for employees of the state of Alabama. It is headquartered in Montgomery, Alabama. David G. Bronner is the chief executive officer....
- Teacher Retirement System of Texas
Teacher Retirement System of Texas is an agency of the State of Texas. The agency oversees the retirement benefits of former public school teachers. The agency is headquartered at 1000 Red River Street in Austin....
(TRS of Texas)
Largest pension funds
| Country |
Fund |
Assets US$ (in billions) |
Inception |
Origin |
Approx wealth per citizen |
|
Government Pension Investment Fund |
$935.5 |
2006 |
Non-commodity |
N/A |
| |
Government Pension Fund of Norway |
391 |
1990 |
Oil |
81,500 |
|
Stichting Pensioenfonds ABPStichting Pensioenfonds ABP , frequently referred to as ABP, is the pension fund for government and education employees in the Netherlands...
(ABP) |
$313 (€215) |
1922 |
Non-commodity |
N/A |
(QuebecQuebec is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking identity and the only one whose sole official language is French at the provincial level....
) |
Caisse de dépôt et placement du Québec The Caisse de dépôt et placement du Québec manages public pension plans in the Canadian province of Québec. It was founded in 1965 by an act of the National Assembly...
(the QuebecQuebec is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking identity and the only one whose sole official language is French at the provincial level....
Pension Fund |
$258 |
1965 |
Non-commodity |
N/A |
(CaliforniaCalifornia is the most populous state in the United States, and the third largest by area. California is the second most populous sub-national entity in the Americas, behind only São Paulo, Brazil...
) |
California Public Employees' Retirement System (CalPERS) |
$218.2 |
N/A |
Non-commodity |
N/A |
|
Stichting Pensioenfonds Zorg en WelzijnStichting Pensioenfonds Zorg en Welzijn is the second largest pension fund in the Netherlands...
(PFZW, formerly PGGM) |
$123 (€85) |
1969 |
Non-commodity |
N/A |
| |
CPP Investment Board Under the direction of the then Canadian Finance Minister Paul Martin, the CPP Investment Board was created in 1997 as an organization independent of the government to monitor and invest the funds held by the Canada Pension Plan . In turn, the CPP Investment Board created the CPP Reserve Fund. The...
(Canada Pension Plan) |
$122.7 |
1997 |
Non-commodity |
$183.300 |
(OntarioOntario is a province located in east-central Canada, the largest by population and second largest, after Quebec, in total area. Ontario is bordered by the Canadian provinces of Manitoba to the west and Quebec to the east, and 5 U.S...
) |
Ontario Teachers' Pension Plan The Ontario Teachers' Pension Plan , commonly referred to as Teachers, is the organization responsible for administering pensions for public school teachers of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment groups currently...
|
$109 |
1990 |
Non-commodity |
N/A |
| |
National Pension Reserve Fund (NPRF) |
$30 |
2001 |
Non-commodity |
? |
|
Empirical study of the effects of pension fund development on global economic growth and development patterns
- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=976586Arno Tausch (2005) ‚World Bank Pension reforms and development patterns in the world system and in the “Wider Europe”. A 109 country investigation based on 33 indicators of economic growth, and human, social and ecological well-being, and a European regional case study’. A slightly re-worked version of a paper, originally presented to the Conference on “Reforming European pension systems. In memory of Professor Franco Modigliani. 24 and 25 September 2004”, Castle of Schengen, Luxembourg Institute for European and International Studies]
See also
- Global assets under management
Global asset allocation or Global assets under management consists of pension funds, insurance companies and mutual funds. Other funds under management include private wealth and alternative assets such as hedge funds and private equity...
- Pension insurance contract
Pension insurance contract is an insurance contract that specifies pension plan contributions to an insurance undertaking in exchange for which the pension plan benefits will be paid when the members reach a specified retirement age or on earlier exit of members from the plan....
- Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...