The UK was one of only two major pension markets to record a decline in assets over the past five years, according to new research.
This retrenchment comes as the world’s largest 300 pension funds saw their assets jump 13.4 per cent during 2025, to a record $27.7 trillion (£20.7 trillion). This is the fastest annual growth for the world’s largest schemes since 2017.
The figures also show that the world largest pension fund, Norway’s Government Pension Fund, became the first pension fund to pass the $2 trillion mark.
The research was from the Thinking Ahead Institute, a global not-for-profit research network founded by WTW, with the US publication Pensions & Investments.
The research shows that the biggest funds performed particularly strongly, with assets held by the top 20 increasing by 14.7 per cent to $11.9 trillion.
However, the research also highlights significant differences between pension markets. Alongside the UK the Netherlands also recorded negative asset growth over the five years to the end of 2025 in both local currency and US dollar terms.
The two countries remain Europe’s largest pension markets, but both have mature systems with significant defined benefit legacies. The Thinking Ahead Institute said this reflected a broader transition taking place in developed pension markets, as schemes balance investment growth against benefit payments, de-risking and changes to scheme structures.
Europe also has a substantially lower proportion of defined contribution assets than other major regions, at 13.2 per cent, compared with 30.7 per cent in Asia-Pacific and 31.6 per cent in North America.
Despite the contraction in the UK and Netherlands, Europe’s overall share of assets among the world’s largest pension funds increased from 23.7 per cent to 24.6 per cent during 2025.
This was boosted significantly by Norway’s Government Pension Fund, which now has assets of $2.1trn, and overtook Japan’s Government Pension Investment Fund as the world’s largest pension fund in 2024. Its growth in 2025 has further consolidated this position. It is now 12.7 per cent larger than its Japanese counterpart, which has assets of $1.87trn.
The US Federal Retirement Thrift fund was the third largest pension, at $1.06trn, while South Korea’s National Pension fund also passed $1trn, with assets of $1.01trn.
North America nevertheless remains the dominant pension region, accounting for 44.7 per cent of assets held by the top 300 funds. However its share fell significantly from 47.2 per cent a year earlier, as both Europe and Asia-Pacific gained ground.
Despite the decline in its overall share, North America recorded annualised asset growth of 6.4 per cent over the five years to 2025 – the strongest performance among the major regions.
Asia-Pacific’s share increased from 25.5 per cent to 26.6 per cent over 2025. Pension funds in the region also had the highest equity exposure, allocating 51.4 per cent of assets to equities, alongside 36.4 per cent in bonds and 10.5 per cent in alternatives.
Thinking Ahead Institute director Jessica Gao said scale and consolidation had become defining trends across the global pensions industry, with the biggest funds increasingly using partnerships as well as conventional mergers to expand their capabilities.
She said this was contributing to the emergence of investment “hyperscalers” – a term borrowed from the technology industry to describe organisations that combine their increasing size with investment capabilities, relationships and governance to exert greater influence.
Gao says: “For pension funds, it is not just about getting bigger, but about making their scale work harder.”
The findings come as the UK government is itself seeking greater scale and consolidation across the pensions industry, including through the creation of larger DC and Local Government Pension Scheme investment pools.
Gao also identified artificial intelligence as an increasingly important area for large pension funds, although she warned that enthusiasm was currently ahead of schemes’ ability to deploy the technology effectively.
She says: “Funds are clear on the potential of AI to improve investment decisions and make their organisations more effective, but many are still building the data, processes and infrastructure needed to put it to work.
“The opportunity is significant, but progress will depend on strengthening the data, workflows and organisational foundations required to scale AI effectively.”
