This chapter looks at the investment performance of pension providers and public pension reserve funds in 2024. It explores the factors behind it and examines the evolution of the asset allocation of pension providers and public pension reserve funds.
Pension Markets in Focus 2025
Abstract
The growth in assets in 2024 was primarily the result of the investment gains that pension providers and public pension reserve funds achieved. First, this chapter shows that asset-backed pension plans achieved positive investment rates of return in nearly all the reporting jurisdictions. Second, it shows that plans with the highest equity exposure were the ones with the strongest investment gains in 2024. And third, it shows that the share of assets invested in equities has been increasing since the 2008 financial crisis. It also examines other shifts in the asset allocation of pension providers and public pension reserve funds.
Asset-backed pension plans recorded positive investment rates of return in 2024, contributing to the growth in assets to a record level. For the second year in a row, pension providers and public pension reserve funds recorded widespread investment gains, with positive nominal investment rates of return in nearly all jurisdictions (Figure 2.1). Pension providers achieved an average nominal return of 9.1% in the OECD and 11.7% in non-OECD jurisdictions. Public pension reserve funds recorded an 8.5% nominal return on average.
In per cent
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
Nominal investment rates of return exceeded inflation rates in most jurisdictions. The returns of pension providers and public pension reserve funds were positive in real terms on average, although the average in non-OECD jurisdictions (1.2%) was lower than in the OECD (5%) given higher inflation rates. Pension providers in Estonia, Israel, Lithuania and the Slovak Republic (among OECD countries) and Pakistan (among other jurisdictions) recorded the strongest investment performance in real terms, with real rates of return over 10%. Pension providers failed to achieve positive real investment returns in only 7 out of 69 reporting jurisdictions, despite positive nominal investment rates of return which did not match high inflation rates (e.g. Angola, Nigeria, Türkiye, Zimbabwe).
Returns in 2024 were generally above the longer-term average annual investment rates. Real returns exceeded the average annual returns over the last 5, 10, 15 and 20 years in most jurisdictions (Figure 2.2).
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
The relatively large investment gains in 2024 contributed to mitigate the losses incurred in 2022, although they were not high enough to offset them completely over the short-term. Real gains in 2024 were insufficient to offset the losses over the last five years in most OECD countries (21 out of 33 reporting) and several non-OECD jurisdictions (14 out of 30 reporting), given the large downfall in 2022.
Real returns were positive in most jurisdictions over the longer term (the last 10, 15 and 20 years), despite several years with poor or negative investment performance, such as in 2008, 2011, 2018 and 2022. The highest long-term investment performance was recorded in some Latin American countries (Costa Rica, Colombia, the Dominican Republic, Uruguay), Canada and Australia with an average real rate of return close to or above 4% over a 20-year period. Pension providers also achieved a relatively high performance in Israel over the last 15 years (at 4.9% on average). A few jurisdictions recorded long-term real returns close to 0 (Bulgaria, Czechia, Estonia, Latvia) despite achieving some of the top performances in 2024 for some of them (Estonia, Latvia).
Asset-backed pension plans with the highest equity exposure achieved some of the strongest investment gains in 2024. Pension providers and public pension funds invest differently (Figure 2.3). While pension providers and public pension reserve funds tend to invest mostly in bonds, some have a larger exposure to equities (e.g. pension providers in the Baltics, Poland, the Slovak Republic among OECD countries; Botswana, Hong Kong (China), Malawi among other jurisdictions). This larger exposure to equities may either be due to members or providers’ preference for risks (e.g. Hong Kong (China)), investment regulations (e.g. Poland) or the design of the system requiring or encouraging investments in equities (e.g. through the introduction of life cycle funds such as in Lithuania). Jurisdictions where pension providers and public pension reserve funds had the highest equity exposure in 2024 were generally also those witnessing some of the strongest returns in 2024 (e.g. Estonia, Latvia, Lithuania, the Slovak Republic among OECD countries; Hong Kong (China) among other jurisdictions).
As a percentage of total investment
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
Within jurisdictions, pension providers with higher exposure to equities generally performed better than other providers in 2024. This was the case for instance in Chile, Colombia, Hong Kong (China) and Latvia, where the difference in the investment rate of return between the riskiest and the most conservative funds was close to 10 percentage points or more.1
Equity investments generally benefitted from positive developments in stock markets in 2024. Global equities delivered positive returns, driven by economic growth exceeding expectations and further boosted by the performance of major listed technology companies in the United States. The MSCI World Index grew by close to 20% in 2024.2 The value of equity indices increased on most OECD stock markets, with some of the strongest performances achieved in several of the largest markets (e.g. 23.8% for the S&P 500 in the United States, 19.2% for the Nikkei-225 in Japan, 18.8% for the DAX in Germany). Stock markets in a few countries underperformed compared to other OECD countries, including Poland, which explains the lowest performance of its pension funds despite a high proportion of assets in equities.
Pension providers and public pension reserve funds have achieved more mixed results on their bond holdings in 2024. Despite the easing of inflationary pressures and the recent decline in short-term policy rates, the average yields to maturity of government bonds remained largely stable, with government bond yields of different maturities evolving differently around the world in 2024 (OECD, 2025[15]). Short-term yields generally fell, whereas long-term yields declined less or, in some cases, increased amid heightened macro-financial uncertainty, resilient output growth and increased budget deficits. A decline in short-term yields leads to an increase in prices of short-dated bonds and therefore gains on those that are in the investment portfolios of pension providers and public pension reserve funds. Yet, long-dated (high duration) government bonds’ prices declined in some OECD countries such as the United States, Japan and in Europe, leading to losses on those bonds (OECD, 2025[15]; 2025[16]).
Likewise, pension providers and public pension reserve funds have achieved contrasting results on other financial instruments (such as real estate). Australia noted that some funds incurred losses in unlisted property. Finland also reported that pension providers achieved a 0.9% return on alternative investments and 0% on real estate investments in real terms. This contrasts with other funds, such as public pension reserve funds in Sweden that achieved stronger returns on alternative assets (e.g. 8.9% return on real assets for AP2 (2025[17])).
For those investing abroad, investment gains depended on both the performance of foreign assets and the exchange rates between the domestic currency and the currency in which these assets were issued. Pension providers in Europe (e.g. the Baltics, the Netherlands, the Slovak Republic, Slovenia) invest the most abroad (Figure 2.4). They tend to invest in Europe, which limits the investment gains or losses due to exchange rates, especially when pension providers from a country in the euro area invest in another country of the euro area. For example, Latvia invested mostly abroad, explaining why Latvian pension providers performed well despite the low performance of local capital markets. In Korea, the largest public pension reserve fund (i.e. the National Pension Fund) recorded strong investment returns despite the negative performance of equities in the local stock market thanks to increased diversification and the performance of global equity markets. Pension providers in some Latin American countries also invested close to 50% of assets abroad at end-2024 (52% for Colombia, 48% for Chile, 46% for Peru). In Chile, the depreciation of the Chilean peso against the main foreign currencies contributed to the positive return of pension funds on foreign instruments.
As a percentage of total investment
Source: OECD Global Pension Statistics.
Pension providers and public pension reserve funds increased their equity holdings in 2024. The proportion of pension assets in equities increased in most jurisdictions (Figure 2.5). Some of the largest increases were reported in the public pension reserve funds of Australia and New Zealand and among pension providers in Colombia, the Czech Republic (Czechia), Estonia, Latvia, Norway and Sweden. This may be due to the increasing value of equities in their portfolios, an active reallocation of assets towards equities, or both. While the increasing value of equity instruments contributed to the increased proportion of assets in equities in portfolios, pension providers and public pension reserve funds can rebalance their portfolio if they want to keep a certain proportion of assets invested in a given instrument. In Colombia, pension asset managers sought to increase their equity holdings and reduce their holdings of local and foreign fixed income instruments. In Czechia, where individuals can select the asset allocation, the increased allocation to equities may reflect people’s higher willingness to bear investment risk to get higher returns. Latvia also saw plan members moving their savings to high-risk plans, as well as an increase in members selecting active plans allowing up to 100% in equities. In the Slovak Republic, the transfer of member assets from bond funds to index funds, initiated during 2023, continued in 2024, leading to a surge in equity exposure.
In percentage points
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and websites of public pension reserve funds.
The increase in equity investments is not a new phenomenon. In 14 selected jurisdictions, while equities accounted for 19.4% of investments of pension providers at end-2008, the share had increased to 29.3% at end-2024 (Figure 2.6). Some jurisdictions have encouraged further risk taking by making default investment strategies (for defined contribution plans) less conservative. For example, Croatia and New Zealand changed their default investment strategy to a less conservative one in 2019 and 2021 respectively. In India, the pension regulator launched a new investment option under the National Pension System (NPS) in October 2024 – the Balanced Life Cycle Fund (BLC) – providing higher equity exposure with a different glide path and tapering to members seeking higher returns.
As a percentage of total investment
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics.
Pension providers have also generally increased their foreign investments over the last decade. Pension providers increased their share of assets invested abroad in 21 out of 27 reporting jurisdictions between 2014 and 2024, with some increasing it by more than 30 percentage points (Latvia, Portugal, Slovenia) (Figure 2.7). Foreign investments continued to increase in 2024 (relative to 2023) in a number of jurisdictions (e.g. in several Latin American countries) but also slightly reversed in some others (by 0.9 percentage point in Romania, 1 in Italy, 1.6 in the United Kingdom, 8.6 in Poland). Several reasons may drive pension providers to invest abroad, such as the search for higher returns, the pursuit of broader geographical diversification, or the lack of investment opportunities domestically. However, they may face some barriers such as investment regulations, which may limit the proportion of assets that can be invested abroad and where they can be invested. There have also been calls for pension providers to invest more domestically to support the local economy and help deepen the local capital markets.
As a percentage of total investment
Source: OECD Global Pension Statistics.
← 1. Chile reported a 13.9% nominal return for the riskiest fund in 2024 compared to 4.8% for the least risky, Colombia a 16.6% nominal return for high risk funds compared to 5.5% for programmed retirement funds, Hong Kong (China) a 15.3% return for equity funds compared to 3.7% for MPF conservative funds, and Latvia a 22% return for high-risk investment plans compared to 6% for low-risk plans in the second pension pillar.