Assets under management of public pension funds in different regions worldwide 2023

As of February 2023, all public pension funds (PPFs) in the United States had assets under management worth approximately 12.2 trillion U.S dollars. This was considerably higher than Asia which took second place, displaying a total value of close to 4.1 trillion U.S dollars in assets under management (AUM). Besides being the region with most AUM, the U.S. had also the largest number of public pension funds.

What is a Public Pension Fund (PPF)?

PPFs are retirement plans set up by local governments that provide compensation to eligible citizens upon their exit from the workforce. PPFs use pooled funds collected from sources such as tax contributions to invest on behalf of employees to generate earnings on investments to provide income upon retirement. PPFs typically invest in lower-risk securities such as government-backed products and blue-chip stocks. However, with changing market conditions, the distribution of assets managed by PPFs has become slightly more diversified with small portions of assets allocated to alternative products to aid in generating returns.

Pension fund management

Typically, PPFs are managed by state-created agencies and companies using a passive management strategy to enable long-term investment growth. Long-term investment in relatively low-risk securities allow pension funds to overcome short-term market volatility. This results in moderately stable returns. The Government Pension Investment Fund (GPIF), for example, is one of the largest PPFs in the world and is managed by an agency on behalf of the Japanese government. Through passive management, the GPIF's value of cumulative returns has steadily increased, acting as a reliable form of retirement for many Japanese citizens.