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Article | Global Pension Finance Watch

Global Pension Finance Watch: Third Quarter 2022

By Nathan Pavlik and David Finn | October 25, 2022

Q3 2022 was another volatile quarter, marked by rapidly rising global discount rates, poor asset performance across the globe, and continued inflationary pressures.

While the sharp increase in discount rates drove positive third quarter pension index results for most regions, asset returns were negative for all regions, notably offseting the liability gains. Inflationary pressures continued across all countries. The United Kingdom is the market with the strongest link of pensions to inflation, and while there were modest increases to the long-term expected inflation compared to last quarter and there was not a significant impact on the pension index. The overall impact of these changes resulted in positive pension index returns for all markets during Q3 apart from Switzerland where the negative asset returns outweighed the liability gains. In addition, multinational companies are facing shifts in exchange rates, with a notable strengthening of the U.S. Dollar.

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that Global Pension Finance Watch captures results at the end of each quarter, we particularly want to highlight the point in time view of this publication in light of current volatility. WTW 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 WTW experts.

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Global Pension Finance Watch: Third Quarter 2022 PDF .3 MB

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