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Article | Global Pension Finance Watch

Global Pension Finance Watch: Fourth quarter 2021

Investments|Retirement
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By Nathan Pavlik and David Finn | January 20, 2022

Continued strong asset performance during Q4 2021 drove positive fourth quarter pension index results for most regions.

Decreasing discount rates during Q4 2021 partially or completely offset the asset gains for most regions; Brazil and Japan saw discount rate increases. The overall impact of these changes resulted in positive pension index returns over the fourth quarter in Brazil, Japan, Switzerland, the UK and the US. Canada and Eurozone decreased slightly over the quarter. The Pension Index improved across all regions for the full year – improvements were double digits in Eurozone, Switzerland and the US, strong single digits for Brazil, Canada, and UK, and relatively flat for Japan. Inflation is having modest impacts so far.

While it is always the case that Global Pension Finance Watch captures results at the end of each quarter, we particularly want to highlight the point in time view of this publication in light of recent volatility. Willis Towers Watson supports the daily monitoring of pension funded status and other key pension financial metrics for those organizations wishing to inform key business decisions.

About this report

Global Pension Finance Watch, published quarterly, reviews how capital market performance affects defined benefit pension plan financing in major retirement markets worldwide, with a focus on linked asset/liability results. We cover defined benefit pension plans in Brazil, Canada, the Eurozone, Japan, Switzerland, the U.K. and the U.S. Specific plan results will vary, often substantially, based on liability characteristics, contribution policy, portfolio composition and management strategy among other factors. The passage of time since quarter end, may also have a significant impact on pension plan financing.

The impact of capital markets on these pension plans is twofold:

  • Investment performance on fund assets
  • Changes in economic assumptions on plan liabilities (as measured under international accounting standards)

If you have questions or comments about this report, please contact our Willis Towers Watson experts.

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