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CAIA Level II: Advanced Core Topics in Alternative Investments, 2nd Edition by CAIA Association

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CHAPTER 4

Pension Fund Portfolio Management

Pension plans (also known as pension schemes or superannuation plans) manage assets that are used to provide workers with a flow of income during their retirement years. Because pension plans may control the largest pool of capital in the world, asset managers need to be aware of the goals and challenges of managing these plans. In a study of 13 developed countries, private and public pension plan assets totaled over $26 trillion, averaging 76% of gross domestic product (GDP) (Towers Watson 2011). It is estimated that 58% of the world's workers are covered by some form of pension plan (Whitehouse 2007). The world's top 15 pension plans controlled over $4,360 billion in assets in 2011 (see Exhibit 4.1).

EXHIBIT 4.1 The World's Largest Pension Plan Sponsors, 2011

Fund Country Assets ($ Million)
Government Pension Investment Fund Japan $1,432,122
Government Pension Fund Norway $550,858
Stichting Pensioenfonds ABP Netherlands $318,807
National Pension Service Korea $289,418
Federal Retirement Thrift Investment Board U.S. $264,013
California Public Employees' Retirement System U.S. $214,387
Pension Fund Association for Local Government Officialsa  Japan  $189,633
Canada Pension Planb Canada $149,142
Employees Provident Fund Malaysia $145,570
Central Provident Fund Singapore $144,844
California State Teachers Retirement System U.S. $138,888
New York State Common Retirement Fund  U.S. $133,023
Stichting Pensioenfonds ...

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