While we have seen many cautious reports about public and private pension systems for retirees in America, there continues to at least be some good news on the total retirement and pension matters at hand. A fresh report from Towers Watson indicates that pension balances in the United States gained by 9% in 2014. That takes the total to roughly $22.1 trillion, between defined contribution and defined benefit plans.

Towers Watson showed that the largest pension markets globally, with percentage of total world pension assets, are as follows: the United states at 61%, the United Kingdom at 9% and Japan with 8% of total pension assets. As most U.S. readers tend to focus on domestic financial matters, 24/7 Wall St. decided to focus on the U.S. findings.

Also, during the past 10 years, U.S. pension plans have maintained the highest bias to domestic equities at 67% in 2014. That is in part due to having increased domestic equity bias in the most recent three-year period. After all, the returns just are not there in bonds any longer — an issue that has acted as a drag on many U.S. pension systems that were counting on the guaranteed (or nearly guaranteed) returns from interest rates.

There has been a rise in alternative asset classes in the past decade. This includes asset allocations into real estate, hedge funds, private equity and commodities. The United States was shown to have grown its alternative asset allocations from 16% to 29% in the past decade.

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Towers Watson’s 10-year figures showed that the United States has grown its pension assets as a proportion of gross domestic product (GDP) by 32% — up to 127% of GDP.

On a global basis, the world’s institutional pension fund assets grew by over 6% in the 16 major markets during 2014 to some $36 trillion. That U.S. market performance of 2014 implies above-average returns versus what was seen in international markets. Global pension fund assets have now grown at 6% in dollar terms on average per year since 2004.

The United States now has a higher percentage of defined contribution assets rather than defined benefit assets. That is now 58% in defined contribution assets, versus 42% in defined benefits. Towers Watson further said that only Australia and the United States have a larger proportion of defined contribution assets versus defined benefit assets.

24/7 Wall St. would remind readers that not all is exactly 100% healthy in U.S. pensions as a whole. We recently highlighted one report indicating that U.S. teachers’ pensions were underfunded by some $500 billion. Also, the 2014 annual report from the Pension Benefit Guaranty Corp. (PBGC) said:

PBGC’s combined financial position decreased by $26.133 billion, increasing the deficit to $61.772 billion as of September 30, 2014, from $35.639 billion as of September 30, 2013. … The multiemployer program’s net position declined by $34,176 million, increasing its deficit to $42,434 million, an all-time record high for the multiemployer program. PBGC’s Fiscal Year 2013 Projections Report shows that the risk of insolvency rises over time, exceeding 50 percent in 2022 and reaching 90 percent by 2025. When the program becomes insolvent, PBGC will be unable to provide financial assistance to pay guaranteed benefits in insolvent plans.

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PBGC generally pertains to defined benefit plans. Those plans have seen ever lower employer participation through time.

The report from Towers Watson does signal at least some good news for U.S. pension systems, but that does not imply that the news is only good news.

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