GCC pension funds hit $397 bln; Saudi Arabia holds largest share

Saudi Arabia has the largest pool of pension assets, which are split between the Public Pensions Agency (for public sector workers) and the General Organization for Social Insurance (for private sector workers).

“The two often co-invest in companies together and alongside the Public Investment Fund. Aside from stakes in dozens of major listed companies, they also invest in private companies,” EY said in the report. 

“However, about 85 percent of the pension assets are invested abroad, mainly in US Treasuries managed by the Saudi Arabian Monetary Authority (SAMA),” it added.

The report also showed that around 20 percent of these funds are invested into equities across local stock markets.

Kuwait is said to have the best capitalized fund after the country moved to recapitalize its pension fund from the budget since 2008.

Qatar's pension assets are also sizeable relative to the population. Its finance ministry injected capital into the fund 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,” it added.

The value of GCC pension funds is relatively low when compared to those provided by employers in the United Kingdom (UK), where asset value is higher than the country’s GDP.  Funds per individual in the UK are also nearly four times the GCC average.

The report also outlined a number of recommendations that would benefit the GCC’s pensions market, including more regulation and governance, as well as the expansion of end-of-service benefit schemes and Sharia-compliant retirement products.