Preliminary data from the Organization for Economic Cooperation and Development show that the collective pension assets of its member countries fell 3.9% in 2018. Much of the decline was attributed to negative real returns on investments. The average return across the 25 countries was -3.1%; and -2.5% when weighted by assets. Australia and Israel led the group with real returns of 5.9% and 3%, respectively, while plans in Poland and Turkey fell 11.6% and 11.3%, respectively. U.S. pension plans returned -3.9% in 2018 and ended the year with about $15.6 trillion in pension assets, or 76.3% of GDP, according to the OECD.
Equity markets played a chief role in asset declines but pension equity allocations still increased in eight of the selected countries. Equity allocations in Denmark, Australia and Greece rose an average of 1.6% during the year. Allocations in Ireland, Mexico, Portugal and the U.S. all declined more than 3%.
A look at end-of-year 2018 equity allocations show a large disparity across the cohort. Australia's 5.9% real return in 2018 is particularly notable given its 45% equity allocation in a down year for the asset class. The relatively low equity allocation of U.K. plans should include the caveat that 26.6% of its pension assets are invested in collective investment schemes that may mask a greater allocation to stocks.
Total pension assets for all OECD countries were about 53% of their combined $27.6 trillion GDP.