Pension Assets Climb to $14.2 Trillion Worldwide

Pension assets worldwide increased by a fifth to $14.2 trillion at the end of 2003, the highest for four years, but rising costs didn’t help close fund deficits, according to a report released Monday.

Assets rose from $11.8 trillion a year earlier as stock markets gained, consulting firm Watson Wyatt said in its report. The dollar’s decline against currencies such as the euro and the pound meant the increase averaged 12% in local currency terms, it said.

“The damage to global pension funds has been severe,” said Roger Urwin, head of Watson Wyatt’s global investment practice in London. “Recovery to full funding levels is very likely to be several years off.”

The three-year stock market slump forced companies such as General Motors Corp., BT Group and Siemens to add money to their plans to try to make up shortfalls. General Motors, the world’s largest automaker, paid $18.5 billion into its plan last year after selling bonds and a unit.

Aging populations and declining birthrates could undermine pension systems further and lower standards of living in developed countries compared with those where workforces are still burgeoning, the report said.

India, for example, will add as many people to its workforce over the next 30 years as the total number of employees in the U.S. and the 15-nation European Union combined in 2000, the report said. Italy will have more retirees than workers by 2030.

“The demographic changes present enormous challenges for developed countries,” said Sylvester Schieber, Watson Wyatt’s director of research. “There will be hard choices ahead.”