Report: Gulf pension funds set to double to $5trn

Assets under management for public-service employees stood at $2.4tn in 2012, says PwC

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Arabian Gulf pension funds are expected to double to $5 trillion by 2020 as regional governments plan for the retirement of their burgeoning populations, reflecting an annual growth of about 8.8 percent from 2012 to the end of the decade, PricewaterhouseCoopers (PwC) said in a report.

Assets under management held for public service employees from the UAE, Qatar, Oman, Saudi Arabia and Kuwait stood at a total of $2.4tn in 2012, according to PwC.

By comparison, UK government pension funds stood at £171 billion in 2012, while corporate funds stood at £1tn in the same period, according to data from the Investment Management Association.

Saudi Arabia has made the biggest contributions towards its pensions funds as more than 2.3 million Saudis are set enter the workforce in the next five years. In the West, pension funds have come under fire for struggling to meet target yields amid a low-interest environment.

New regulations such as Solvency II, Basel III and the US Dodd-Frank Act are all expected to have implications on European pension schemes.

“There are a lot of debates in Europe now on how to meet those returns when the baby boomers will retire,” Henin said.

Pension offerings in the GCC so far have been exclusive to nationals of the union’s respective countries.

Abu Dhabi and Dubai’s respective departments of economic development in March 2012 called for the creation of an expatriate pension scheme after feasibility studies were made.

Standard Life, the UK’s biggest corporate pension provider which opened a Dubai office just over a year ago, said the establishment of a government framework for expatriate pensions were among the biggest opportunities on offer.