DOHA: The size of GCC’s public pension funds stands at $397bn, representing nearly a quarter of the GDP and $15,000 per national. Kuwait has the best capitalized fund, EY’s GCC Wealth and Asset Management 2015 report noted.
Qatar’s pension assets are also sizeable relative to the population, following a capital injection from the Ministry of Finance in 2012. Since then, Qatar’s General Retirement and Social Insurance Authority appears to have focused heavily on investment in local equities, including stakes in major companies.
Qatar’s pension fund has stakes in major companies such as Industries Qatar (16 percent) and Ooredoo (13 percent). In 2012, a report by Qatar’s General Retirement and Social Insurance Authority noted that 47 percent was invested in local equities, but the level now appears to be as much as 70 percent, with most of the rest in local bonds, the EY report “Fast growth, divergent paths”, launched at the FundForum Middle East 2015 noted.
In 2012, a report by the Kuwait has the best capitalised fund, relative to the size of its economy and citizen population. This follows an initiative to recapitalise the pension fund from the budget since 2008, filling an actuarial deficit that had been estimated at nearly $40bn. In international terms, its assets relative to population are similar to those of the UK’s pension funds.
GCC governments are relooking at existing models of both public and international pension funds to ensure they are sustainable.
George Triplow, MENA Wealth & Asset Management Leader, EY, says: “Public pension funds in the GCC are only just coming of age, just over a fifth is invested in local equities. Two big issues are currently driving significant rethinking in the sector. The first is the sustainability of public pension funds for nationals, given the relatively small size of the funds, demographics and the gap between contribution and benefit levels. Secondly, there is a growing recognition by many employers that end of service benefit (EOSB) payments received by expatriates are neither adequate nor suitable as an alternative to a pension.”
The size of GCC pension funds is relatively low, compared with employer-provided pension funds in the UK, for example, where these assets are larger than GDP and funds per individual are nearly four times the GCC average.
Saudi Arabia has the largest pool of pension assets.
