President Trump’s executive order that America’s 401(k) plans invest more in private markets will take five to ten years to have an impact. Although private assets are a significant part of America’s defined benefit pension fund assets, the ability of defined contribution funds to invest in private markets is a little more complex, explained seasoned investor Michael Davis, head of global retirement strategy at T. Rowe Price, speaking at the Fiduciary Investors Symposium at Oxford University.

“I think, at the end of the day, it’s going to be a long road for private assets in defined contribution plans,” he told an audience comprising 68 asset owners from 17 countries gathered alongside global asset managers for the three-day conference.

“When I was in government, I learnt that you can kind of tilt [policy] in a direction, and eventually, it picks up speed, but it takes a while. I think the executive order will help, but I wouldn’t expect there to be a change overnight,” he said, recalling his time helping craft pension fund policy while serving under the Obama administration.

Enduring litigation issues will continue to dent plan sponsors’ enthusiasm to invest in private markets, he said. Investing in private assets incurs higher fees and will therefore attract lawsuits that particularly target fees, costs and performance.

“I experienced this myself in terms of some anxiety, because I am the head of the investment committee for our own T. Rowe Price plan. So I live some of the same anxieties that many of our clients experience,” said Davis.

Other barriers to change include low financial literacy. Although the US has higher levels of financial awareness than in other countries, he flagged that public knowledge of private assets is poor. “Even things like public assets, people struggle with.”

Liquidity is also an issue since DC investors “like daily liquidity.” However, he noted the continued evolution of liquidity-supporting private market structures and vehicles.

“We expect to see more of that innovation and I do think that this is an area that we can learn a lot from our colleagues around the world who have deployed these assets into defined contribution plans for a much longer time than the US has.”

He said private assets are unlikely to be offered as a separate option in a defined contribution plan. Instead, investors will most likely tap into alternatives via a diversified portfolio in a target date fund.

The pros and cons of legislation

America has a successful history of policy makers successfully steering the $37 trillion retirement industry in new directions.

The passage of the 1974 Employee Retirement Income Security Act (ERISA) laid the foundations for capital formation, and has gone on to fuel an industry of private asset managers characterised by hedge funds, private equity and private credit.

Davis noted that other countries are now starting to think about how to use their retirement assets as a lever to spur capital formation and local investment.

But he warned that governments need to tread a fine line between pushing for the productive use of capital and maintaining the fiduciary duty enshrined in ERISA law, which ensures plan sponsors act solely in the interest of beneficiaries. It’s a line that has got blurred in the US at times – like when unions pressured to direct assets towards creating jobs. Something that he believes has fed directly into the politicisation of ESG in the US.

Davis also talked about the importance of staying invested in an inflationary market and avoiding non-productive investments.

“If you’re in a bank account earning next to nothing, you are losing money every day.”

He suggested countries integrate a national default policy whereby beneficiaries default into a diversified pool of assets that includes growth and fixed income assets.

“Again, in a world where inflation is a bigger problem, the idea that you have big pools of people that are still investing in cash, I think is a tragedy. And the government can do something about that. In the United States, prior to 2006/ 2007 a lot of people were invested in either the stock of the company they worked for, which is not a diversified place to be, or cash. And the department did a thorough analysis to say this is not where people should be.”

Davis also argued the case for active management in today’s concentrated market.

Still, legislation in the US retirement industry has also created barriers to change and a disincentive to innovate in contrast to newer pension systems like Australia. Australia’s super funds have been able to hone in on the best concepts like automatic enrolment and centralisation, for example.

“One of the big issues in the United States is portability. So if [people] change employers, [they] have to individually take those assets. It’s a whole process to roll those assets over,” he concluded.

APG Asset Management, the largest pension fund manager in Europe, is so convinced by the advantage its regional office network brings in sourcing and running private assets, that Patrick Kanters, member of the APG Asset Management board and chief investment officer of private investments since 2023 is based out of Hong Kong.

Kanters – who stepped into the position when APG split the single CIO role into two distinct positions in capital markets and private investments – oversees some $180 billion in global real estate, infrastructure, private equity and natural capital out of APG’s Wan Chai office, home to a 95-person team around two-thirds of whom work in private markets, alongside teams in Singapore, New York and Europe.

He tells Top1000funds.com that Hong Kong is a prime location from which to proactively source opportunities for APG’s sole client ABP, as the €552 billion civil service pension fund seeks to not only increase its allocation to infrastructure (from 6.5 per cent to 10 per cent) and private equity (from 6 per cent to 8 per cent) from opportunities fanned by mega trends like the energy transition and digitisation, but also meet ambitious impact investment targets primarily sourced from private assets.

In early 2025, ABP requested APG cease asset management services for all other pension fund clients and manage money exclusively for ABP come 2030.

“It’s difficult structuring illiquid strategies at source when you fly in and fly out,” says Kanters, who joined APG as co-head of real estate back in 2005. “We serve on the boards of companies and funds we have co-created and that requires being in that time zone so you can attend board meetings ⁠– the strategic controls of these companies and funds need to be in the region.”

Moreover, Kanters believes the different worldview that comes from being based in Asia offers another valuable investment edge.

“The Hong Kong and Singapore teams have a different view of the world. All our local teams help ensure we have a more balanced perspective on the world, and they support our ability to come to less biased decisions which leads to a better performance.”

Still, for all its proximity to Asia’s largest market, APG’s biggest exposure in China sits in real estate concentrated in large investments in logistics and data centres in Hong Kong and mainland China. Outside this, Kanters says APG owns few private assets in China ⁠– private equity is limited and APG doesn’t own any Chinese infrastructure.

“China never really needed money for infrastructure because they fund it themselves,” he reflects.

Moreover, he says the Chinese real estate market is particularly tough because of thin trading, exacerbated by many US and Canadian investors backing out and liquidity drying up.

Allocating more to global private equity and infrastructure

APG began investing in global infrastructure in 2004 and the current allocation is around 6.5 per cent. To reach ABP’s new target of 10 per cent by 2030 (in line with real estate), Kanters says the team aims to allocate $3 billion a year focusing on mega themes.

Building out the private equity allocation to ABP’s 8 per cent target is easier, primarily because the fund is overweight in the asset class from the denominator effect of stellar returns from previous years.

APG will continue to venture into the secondaries market to sell private equity holdings. However, the team has pared back secondary sales compared to a more proactive strategy two years ago. Now sales are mostly confined to older vintages that won’t provide co-investment opportunities. He says APG rarely buys in the secondaries market because older fund opportunities don’t comply with the investor’s high responsible investment standards.

Unlike in capital markets, where APG has run different strategies for its different clients, the investor runs one strategy per asset class in private markets, so its multiple client base is aligned. As APG’s clients drop away (like construction industry pension fund bpfBOUW and PWRI, which has transitioned to the new pension system), APG’s private markets team is adjusting and adapting the risk-return of the portfolio to wholly meet ABP’s requirements, particularly around impact.

ABP wants to invest €30 billion in impact by 2030, primarily focused on private markets. Around €10 billion will be ploughed into the Netherlands, where the investor will focus on assets like affordable housing and investments supporting the energy transition.

Impact in private equity

Kanters observes that the biggest challenge inherent in impact investment is the absence of a single standard of what accounts for impact. It means investors must “come up with their own definition” that brings implementation challenges because GPs also have different definitions. APG has been able to build out its own impact standards off its success in responsible investment and by comparing notes with other responsible investors also investing for impact. “Standards will ultimately become more aligned,” he says.

Next, sourcing and committing to private equity funds focused on impact is complicated because although there are more, newer funds, they lack long track records. Moreover, investing in a fund means APG has less control over impact because the fund manager has discretion to put the money to work.

The clock is also ticking. Unlike real estate and infrastructure, where investments are typically 10-15 years, the private equity team is under pressure to invest money as assets materialise because they are held for a much shorter time. “We need to keep re-investing at a much higher pace in private equity,” he says.

Fortunately, it is easier to integrate impact in co-investment where the private equity team targets 40 per cent of the portfolio split across all regions, of which the US is the largest, followed by Europe and APAC. “Private equity co-investment and impact investing is a strong focus. We can select the investments that fit best, comply with our responsible investment requirements and lower costs.”

Impact in infrastructure

When it comes to achieving impact in infrastructure, success depends on APG’s ability to build new assets like renewable energy and transmission infrastructure.

“It’s not about buying existing assets, but about developing and adding new assets that support the energy transition,” he says.

Success requires capping development risk and negotiating fixed price development agreements and long-term power price agreements to ensure stable and predictable returns.

The team learnt valuable lessons during the pandemic when development risk in new real estate assets, including the spike in commodity prices and inflation, delayed construction. “In some ways, it was a perfect storm. We learnt a lot, particularly around mitigating development risk and sharing it with the partners involved,” he says.

He also espouses the importance of ensuring the ability to sell an asset when investing alongside others in consortia. In big ticket infrastructure, APG aims for a large minority position and therefore often invests alongside other asset owners like Omers Infrastructure, New Zealand Super and Japan’s Government Pension Investment Fund, amongst others.

An exit strategy must always be in the small print even when partnering with long-term, like-minded investors and with no initial intention to sell.

“Allocations might need to be increased or decreased, and also our long-term partners’ strategies can change,” he concludes.

A lot of words have been written to explore what risk is and we are responsible for some of them. Here we make the case that risk looks different to different models of reality. Sometimes understanding is illuminated by considering what something is not. So, risk is not historic volatility, and it’s about not knowing. The future is fundamentally hidden – we just don’t know.

Turning to what risk is, for us it is mostly about a permanent impairment to mission. If an outcome has the potential to compromise our ability to meet our mission, then we are facing considerable risk. If, instead, it is merely unwelcome, uncomfortable and stressful then either we have enormous buffers, or our risk management is excellent. When thinking about risk, context matters.

Models of reality

We have previously written about the need to build models of reality. Reality is too big and too complex to understand, and so we build models – simplifications. As simplifications these models will be wrong, but many of them are useful. Once upon a time we modelled the solar system with the Earth at the centre. This was wrong but useful enough for its time. However, if we had failed to update this model our subsequent attempts at space exploration would have been far less successful. By analogy, we are arguing that we need to update from risk 1.0 to risk 2.0. These are built on different models of reality, as we explore below.

Risk 1.0

The origin story of risk 1.0 starts with Harry Markowitz in 1952. From this point flows the tools (eg mean-variance optimisation, capital asset pricing model etc) and theories (eg modern portfolio theory, separation theorem etc). However, all of it is based on a particular model of reality which is no longer fit for purpose.

Classic economics built a model of reality, and derived laws to explain the behaviour of that model. Within the model, we could perform calculations and make predictions, while deviations of the model from observed reality could be explained as ‘exogenous shocks’ (originating outside the system). Risk model 1.1 was essentially a Gaussian log-normal distribution combined with the knowledge that we would be hit from time to time by unknowable and unquantifiable shocks. We have now risen up the rungs of this ladder to risk model 1.x, which is ‘Gaussian with very sophisticated modifiers’. The modifiers can change the shape of the tails of the distribution, and seek to bring into the model as much of the external shocks as possible. In truth, leading edge risk management under risk 1.0 is genuinely impressive. However, it has been unable to address one problem – namely that the ladder is leaning against the wrong wall.

Risk 2.0

If you will forgive us the conceit, we will suggest that the origin story of risk 2.0 starts in 2012. In The wrong type of snow, figure 02 compares ‘risk 1’ with ‘risk 2’. Back then, we already believed that the world was best understood as a complex adaptive system. Since then, we have observed:

  • continued growth in complexity, with its associated demands for greater information processing (part of the ‘great acceleration‘)
  • a dramatic rise in concern over, and attention given to, climate change
  • an adverse shift by climate scientists in terms of their expectations of where climate tipping points lie (ie at lower levels of temperature increase than previously anticipated)
  • that we are now in breach of seven of the nine planetary boundaries
  • growing geopolitical risks.

In addition, our thinking on systemic risk has developed considerably.

Again, for the sake of brevity, we will here only address two concepts relating to complex systems. The concepts are endogeneity (originating inside the system) and emergence, and both are important to understand the difference between risk 1.0 and 2.0.

Endogeneity

Risk 2.0, in contrast to 1.0, accepts that risk can arise from within the system, precisely because risk 2.0 assumes a system, and a system has feedback loops. These loops can have physical properties and obey physical laws, such as increasing greenhouse gas concentrations, which trap heat, which changes the risk of hurricane damage for real estate in Florida (and elsewhere). Or they can be more metaphysical, an idea best expressed by George Soros’ ‘reflexivity’. For example, if investors believe that markets are efficient, then that will change how they invest, which in turn will change the nature of the markets (but not necessarily make them more efficient). A reinforcing feedback loop, insufficiently constrained by a balancing loop, can quickly cause a system to exhibit extreme behaviour and trigger tipping points.

Emergence

The second concept, emergence, requires the abandonment of reductionist cause-and-effect thinking, and the embrace of holistic systems thinking where we can observe the effect but will never know the exact cause. Emergence is a characteristic of any complex system where there is a sufficient number of interacting entities. Classic examples are termite mounds and ant colonies.

We can use this idea to consider the global economy. There are billions of us interacting continually, so perhaps the global economy is an emergent phenomenon. We can observe that global economy consumes energy and produces and distributes goods. Is it controllable? Well, 196 countries signed up to the Paris Agreement (many put it into national law), produced commitments to reduce greenhouse gases (nationally determined contributions), and… At the time of writing, the annual production of greenhouse gases is still rising, despite the most powerful actors decreeing that they must fall (see [1] [2]). We know we need to transition away from fossil fuels, so we build renewable energy generation. But the transition doesn’t happen, because the emergent global economy will happily use all the energy it is offered (AI and crypto, anyone?). Perhaps the global economy is not controllable.

Therefore, the main difference between risk 1.0 and risk 2.0 is the underlying model of reality. Newtonian physics for 1.0, and complexity science for 2.0. We are in no doubt that risk 2.0 is conceptually superior, but we acknowledge that it is far, far less mathematically tractable and, for the foreseeable feature, harder to engage with. Building a new risk model, and a new risk management process will be very difficult. It will require us to think wider (to address endogeneity, among other things), and softer (to cope with emergence, among other things) and longer (see later in series).

Tim Hodgson is co-founder and head of research of the Thinking Ahead Institute at WTW, an innovation network of asset owners and asset managers committed to mobilising capital for a sustainable future.

[1] The majority of government targets and actions are insufficient, and in many cases highly or critically insufficient to achieve the goals of the Paris Agreement, see for example

[2] In addition, existing Nationally Determined Contributions fall far short of the amount of emission reduction required to achieve a WB2C outcome, see for example

The biggest challenge and opportunity for superannuation, pension and sovereign wealth funds is the climbing support ratio, particularly in developed economies, according to Michael Davis, head of global retirement strategy at T. Rowe Price.

The support ratio, sometimes referred to in less flattering terms as the old-age dependency ratio, has been in rising across every major global economy. For example, in Japan, the support ratio is 51, meaning 100 working adults support 51 retirees. In the 1950s, the ratio was eight.

In the US, from where Davis hails, the ratio has steadily climbed to 33, sparking commentators to label this demographic dynamic, The Silver Tsunami.

Michael Davis

Add to the mix, rising life expectancy, falling birth rates, and tighter migration policies restricting the flow of labour, and the result is pay-as-you-go (PAYG) pension systems under enormous pressure.

“PAYG systems have provided a tremendous amount of security for individuals around the world for many, many years but they are under immense financial pressure,” Davis says.

“The same is true of defined benefit (DB) systems because people are living longer and the cost of defined benefit plans just keep going up without clarity or certainty around the ability of governments to fund them.”

To manage this pressure, countries have three options: increase taxes, slash benefits, or shift from the PAYG model towards advanced funding and private savings.

“It’s inevitable that private savings will be a bigger part of the equation,” Davis says.

“Culture and language are idiosyncratic but maths is universal, and the maths suggest that private savings are required to provide individuals with the level of retirement security that they are seeking and deserve.”

While private savings, which include defined contribution (DC) funds, represent the majority of super and pension assets in countries like the United States and Australia, in many other countries, DB funds still dominate the landscape.

“Over time, every country will inevitably go down the path of more private savings,” Davis says.

“Depending on the country, the velocity of their journey will differ but given the longevity trends, it’s simple maths.”

Shang Wu, portfolio manager, retirement strategy at Australia’s Aware Super, agrees that private savings will play an increasingly important role globally in helping people get the best possible income in retirement, adding that Australia has a unique opportunity to play a leadership role being a mature, largely defined contribution system.

According to Wu, the retirement income challenges facing super funds can be split into two categories: near-term and longer-term.

The near-term challenge is closing the advice gap, particularly as members move from accumulation to decumulation and seek help converting their superannuation balance into an income stream.

“We know that quality advice can make a real difference, but advice needs to be affordable and scalable, and that’s a big challenge,” he says.

When it comes to advice, Aware Super has a hybrid model that blends human and digital interaction. In the year to June 30, 2025, the fund assisted over 100,000 members to set up a retirement plan for no additional cost.

At the over £50 billion UK workplace pension scheme, Nest, where the average member earns £24,000 per annum and retires with a modest account balance, most will not seek advice, highlighting the important role that funds play in supporting all members to achieve good retirement outcomes, says Gareth Turner, head of strategic investment projects at Nest.

“Our members want to use their Nest savings for a lifelong income akin to wage replacement and because they are not necessarily going to get financial advice, they want a lot of support from their scheme to provide them with that lifelong income,” he says.

Nest has developed a retirement income blueprint, which proposes a core default pathway for members transitioning from accumulation to decumulation with the scheme making decisions on matters such as a sustainable withdrawal rate and longevity protection.

“Members can access something like a wage replacement without being burdened with complex decisions about how to manage this on their own,” Turner says.

If closing the advice gap is the industry’s near-term challenge, Wu says the longer-term challenge is investing portfolios for retirement.

“It may not be the most pressing, urgent problem right now because most funds still have the majority of assets in accumulation but as demographic changes accelerate, asset owners will need to demonstrate their ability to invest for members’ retirement,” Wu says.

“As pension funds, our role is very different to fund managers who serve institutional investors. Our job is to help members achieve their retirement dreams and we need to invest for that purpose.”

Davis, a former deputy assistant secretary of Labor, Retirement Oversight Division for the Obama Administration, says government and industry must “partner” to ensure public policy that builds national savings and maximises income and confidence in retirement.

He cites three key areas where government can play a greater role: product choice (there should be less); retirement income (there should be more); and access to affordable financial advice.

When it comes to choice, workers should ideally have between 8 and 14 investment options, Davis says, adding that limiting options encourages people to make better decisions.

“Things are going to have to be simpler, particularly for retirement incomes, because managing decumulation is so much more complicated than accumulation,” Davis says.

“Governments need help to design a system that provides curated choices. Also access to advice is important because these are not simple questions and problems, and people need help to address them.”

On the subject of retirement, Davis cites Australia’s Retirement Income Covenant, which places a legal obligation on superannuation funds to assist members in retirement, as a step in the right direction.

Shang Wu

Shang describes the retirement income covenant as a “gamechanger” that has prompted Australian funds to focus on retirement and, as a result, accelerated innovation.

While there is no federal mandate in the US for funds to provide a retirement income solution, Davis believes that the government should make it “easier” for the industry to provide retirement products by providing “more safe harbors” in regulation.

“Something that has stuck with me from my experience in government is the important role that government plays in creating urgency to solve national issues,” Davis says.

“Looking at Australia, the Retirement Income Covenant has created a sharp focus on that issue across the system and if we see more of that [globally], we’ll get these problems solved more quickly.”

As for the Trump Administration’s move to encourage America’s 401(k) plans to invest more in private assets to increase the sophistication, diversification and performance of the country’s vast $8.9 trillion DC asset pool, Davis says all investments and managers must compete on merit.

“Private assets, like any asset class, have to earn their place and deliver a mix of risk and return parameters that add to the overall portfolio,” he says.

“There is a compelling investment case, as other countries have realised, but there are headwinds too including fees, liquidity and operational complexity.

“Another consideration, particularly in the US, is litigation, which makes [DC] funds more reticent to take on higher risk and fees.”

Aware Super has been a significant investor in alternatives and unlisted assets for many years.

Shang says the case for private assets is as strong in retirement as it is in accumulation.

“Private assets have a key role to play in a diversified portfolio because of their unique risk and return profile and that doesn’t change because you move into retirement,” he says.

“There are liquidity issues to manage but we’ve proven our ability to manage the liquidity of private assets and that capability has been tested in both up and down markets.”

Inflation poses a significant long-term global challenge for investors and Davis says greater diversification is critical for retirees to maintain their purchasing power.

“Multi-asset solutions will have to be a central part of the equation,” he says.

“We need to be open to the possibility of a national default policy that encourages people into diversified solutions with professional fund managers making asset allocation decisions.”

Understanding and managing trade-offs

To support the industry to understand and address the retirement income challenge, T. Rowe Price developed a five-dimensional framework for exploring retirement income needs and potential solutions.

The manager’s 5D framework establishes the foundational attributes of the “in retirement experience” for individual investors and quantifies the economic tradeoffs between these attributes.

The five attributes are longevity risk hedge, level of payments, volatility of payments, liquidity of balance, and unexpected balance depletion.

“Often these attributes and parameters are presented individually but there are tradeoffs that members and individuals need to make when selecting a retirement solution that is right for them,” Davis says.

“Our framework is extremely robust because it incorporates market research that required survey participants to make those tradeoffs to give us a better signal of what people really want and value.”

Nest’s retirement income blueprint seeks to help members manage those tradeoffs.

It proposes to blend three strategies together.

The first is a flexible income account which would be invested in capital markets, comprising the majority of members’ assets and provide a regular income from around state pension age until an advanced point in retirement, such as age 85.

This would be flexible and liquid, allowing members to change their mind about how they’re managing their retirement savings if they wish to.

Second, to manage longevity risk, the scheme would use a small percentage of the pot and, at a mid-point in retirement, circa age 75, invest in a longevity risk pooling mechanism, such as a bulk deferred annuity.

This would begin paying out around ten years later, at the point that the income from the flexible income account has been exhausted and provide members a secure income for the rest of their lives.

Third, members could have access to a savings account to save for emergencies, across their retirement.

“Members would see a sustainable income provided to them by Nest and, in the background, we would be blending strategies together to deliver that income to them,” Turner says.

“Members want flexibility early on in retirement but, later on, they are willing to trade off that flexibility for security. Our members really want a lifelong income stream.”

The desire for a lifelong, guaranteed income stream is universal, according to research conducted by T. Rowe Price.

“That makes sense because many people are coming from a DB environment where there is a consistent payment stream and guarantee of sorts,” Davis says.

“Across the board, people want as much protection as they can get but the question is always how much are they willing to pay for that guarantee.”

For super funds that want to better understand and meet the unique needs of their member-base, T. Rowe Price’s 5D framework aims to narrow down the retirement income universe for the solutions best suited for specific cohorts.

Published in partnership with T. Rowe Price.

 

The Global Pension Transparency Benchmark has been the driving force behind global pension funds’ improved transparency of disclosures, with 92 per cent of the 75 funds measured improving their transparency scores during the project’s lifespan. 

A collaboration between Top1000funds.com and CEM Benchmarking, the GPTB began with the ambition of holding pension funds to account on their openness of disclosures and has evolved into the yardstick for the transparency of global asset owners with key stakeholders.  

Between 2021 and 2025, the project collected more than 11,000 data points per year across 15 countries and the five largest pension funds in each jurisdiction, assessing the transparency of disclosures around the chosen value drivers of cost, governance, performance and responsible investing.  

The five-year results underscore the GPTB’s impact and many pension funds’ drive for betterment. 

At the country level, all 15 nations’ pension funds made progress. Australia, which has more than A$4 trillion ($3.4 trillion) in its defined contribution pension system, was the biggest mover with an overall country score uplift of 19 points in five years. 

Since the GPTB began publishing individual fund scores in 2022, when Canada’s CPP Investments topped the list with 81 out of 100, transparency standards have surged. In 2025, 18 funds (including CPP Investments) have exceeded that score.  

Norway’s $1.9 trillion Government Pension Fund Global, which scored just 75 in 2022, achieved a remarkable leap and earned a perfect 100 in both 2024 and 2025.  

The A$330 billion ($215 billion) Australian Retirement Trust, ranked ninth in 2025 with 92 points, was the biggest improver among all funds over the past four years. In 2022, QSuper – which later merged with SunSuper to form Australian Retirement Trust – scored just 49 points, but the consolidation has prompted the creation of more rigorous public reporting standards. 

Overall, 92 per cent of funds improved their transparency scores during the project’s lifespan, with the top 20 funds gaining an average of 19 points in four years. Among the laggards, 19 funds had a transparency score under 50 in 2025, compared to 27 in 2022.  

The numbers show clear progress, but the real stories emerge from individual funds. Through their own reflections, leading funds reveal the challenges they faced in improving transparency and the strategies that drove their gains. 

Life after the perfect score for NBIM 

Looking across the benchmark’s top performers, CEM Benchmarking researchers observed real change within an organisation comes from the internal leadership team, rather than from external forces such as regulators. 

This is exemplified in the $2 trillion Government Pension Fund Global, where CEO of its investment management company Norges Bank Investment Management Nicolai Tangen spearheaded the transparency initiative internally – similar to his role in the fund’s radical adoption of artificial intelligence.  

In 2022, the first year of individual fund scores, the fund ranked fourth in cost, 33rd in governance, eighth in performance, and ninth in responsible investing and in 2025, all of those scores are a perfect 100 for the second year in a row.  

“As an investor, the right kind of transparency strengthens our dialogue with the 8,500 companies in our portfolio,” NBIM chief communications and external relations officer Marthe Skaar tells Top1000funds.com. 

“The Global Pension Transparency Benchmark has pushed us and our peers to be more deliberate about what we disclose. When done well, collective transparency can drive better practices across the industry.” 

Lessons from CPP Investments 

Canada as a nation has reigned for five straight years as the country with the highest score, as measured by the average score of the five largest pension funds. The five Canadian funds surveyed have consistently stayed among the top 15 ranked funds even though competition has ramped up over the years. The nation’s largest investor, the C$714 billion ($510 billion) CPP Investments, led the charge over the years.  

To have sound transparency practices, a fund’s public disclosures not only have to be available but also easily accessible. 

Beyond annual reports, CPP Investments structures its public disclosures around quarterly financial statements; policies and proxy voting reports; public meetings with beneficiaries around Canada; digital access and its website and social platforms; and executive communications via speeches and interviews.  

“Transparency is how we serve Canadians and how we compete globally – a cultural advantage that deepens trust, strengthens partnerships, and attracts talent,” CPP Investments senior managing director and global head of public affairs and communications, Michel Leduc, tells Top1000funds.com.  

A healthy dose of peer competition has also pushed funds collectively to pursue excellence. “Retirement systems endure only when the public trusts them. We want the sector as a whole to perform well. One bad performer hurts the sector, which hurts all of us,” Leduc says of the dynamic.  

“Leaning heavily into transparency to earn public trust and confidence means welcoming and being comfortable with ‘holding our feet to the fire’ as energy to perform at the highest level.  

“That is good to inspire a healthy competitive spirit and hard work. That’s palpable across all our offices worldwide.” 

In factor rankings, Canadian funds had the best practices in responsible investing, governance and performance reporting but were beaten by the Netherlands in transparency of cost disclosures. 

Leduc acknowledges there is always room for improvement within the fund. It aims to run ahead of stakeholder expectations but not improving “for the sake of it”.  

“It’s never just about more information. Not all information is useful. It is about the right information. This is the distinction I frequently make between disclosure and transparency,” he says.  

“The latter implies something more sophisticated. It is goal-oriented, including whether it leaves the stakeholder better informed and therefore more likely to support the strategy. They become promoters.” 

NBIM’s Skaar echoed CPP Investments’ sentiment that more information may not lead to more transparency. The fund believes that having good transparency means being accountable to stakeholders while protecting intellectual property related to investments. 

“Transparency is a moving target, and we need to be thoughtful about that. What stakeholders need to know evolves, and so must our approach,” she says.  

“The challenge isn’t just doing more – it’s ensuring that what we share actually serves accountability and understanding, without creating noise or exposing information that could harm the fund’s ability to deliver returns.”  

Global asset owners have made significant advancements in the transparency of disclosures with the industry, showing unprecedented alignment with best practices in performance, responsible investing and governance disclosures.

However, transparency of cost disclosures continues to be a pain point, according to the 2025 Global Pension Transparency Benchmark.

A joint initiative between Top1000funds.com and CEM Benchmarking, the 2025 edition of the GPTB marks the final instalment of a five-year project which was established to showcase best practice in the industry and provide a self-improvement framework for fiduciary investors.

Each fund and country analysed is given an overall transparency score out of 100, which is informed by their reporting practices across four dimensions: cost, governance, performance and responsible investing.

This year’s results are a clear indication of the steps that global pension funds have taken to enhance trust and improve reporting practices. In 2025, the average transparency score for funds is 65, compared to 63 last year and 60 in 2023.

More funds continued to enhance the quality of their public reporting, with 61 per cent lifting their scores – slightly lower than the 72 per cent that did so last year.

Responsible investing disclosures continue to be the area with the most measurable change, with the average country score of 71 in 2025, which represents a significant jump from 47 in the first edition of the GPTB in 2021.

Eight funds received a perfect score in at least one factor, with Norway’s Government Pension Fund Global scoring 100 in all four and taking the top spot in the fund rankings for the third year in a row.

The average country score of the performance factor rose to 66 (from 64 last year), while the average governance score edged up to 75 (from 74 in 2024).

But funds have failed to make inroads on cost reporting. Over the five years of the GPTB project, the average country score actually regressed from 51 in 2021 to 49 in 2025.

Cost

Pension funds were scored on cost across 28 questions in three aspects common to all, including annual and financial report disclosures, asset class disclosures and the completeness of external management fees, and one aspect focused on member service.

Year on year, the average country score on the cost factor did not see any improvements (49 points). There is also a great dispersion of results with individual fund scores ranging from 11 to 100.

The Netherlands continues to demonstrate best-in-class cost reporting with the highest score of 90, while Denmark and Switzerland are the two countries among the top 10 whose rankings improved.

The benchmark notes that there are barriers to comparability in reviewing costs across the globe, due to differences in tax treatment, organisation/plan types, and accounting and regulatory standards. The review is focused on the material areas common to most funds.

Governance

Organisations were evaluated across 35 questions across four components in governance, which included the disclosure of governance structure and mission, board qualification, compensation and team structure, and organisational strategy.

Three of the six funds that achieved a perfect score in this category are Canadian investors. Canada is also the country with the highest governance reporting score of 99.

Norway was the only country among the top 10 overall with improved rankings in governance.

The benchmark report notes that governance scores were most closely correlated with the overall score and proposes that as good governance produces positive results, it creates greater incentives to be transparent with stakeholders.

Governance also has a demonstrated relationship with responsible investing, as the report notes that good governance could prompt funds to move beyond purely managing assets and towards creating social and environmental benefits.

Performance

Performance scores were based upon 44 questions across seven components that were common to all funds, and two (member services and funded status) that were only applicable for some asset owners.

The benchmark report notes that components were re-weighted to accommodate what was not applicable, so that each individual fund was scored out of 100.

Canada again claimed the top spot in performance reporting disclosures with a country average score of 92, followed by the US and Australia. South Africa was the only nation in the top 10 to lift its ranking, improving from a score of 61 in 2024 to 66 in 2025.

The report notes that disclosures of the current year and at the total fund or investment option level are generally comprehensive, however reporting on longer time periods and asset class results tends to be minimal or missing. Some funds disclose intermediate (for example, three to seven years) performance figures.

Responsible investing

Assessment around responsible investing is the most comprehensive with 47 questions across three major components. The average country score was 71 in 2025, up from 67 in 2024 and 47 five years ago. The massive uplift is a sign that the responsible investing trend remained resilient despite headwinds facing ESG.

Canada retained the top spot in the factor ranking with an average score of 96.

Although sitting outside the top 10 leader board, three Latin American nations – Mexico, Chile and Brazil – improved their rankings, all with a score uplift of more than five points.

The Nordic countries – Sweden, Denmark, Finland, and Norway – continued to hold high standards as a region with responsible investment reporting, with all countries scoring higher than the factor average.

The benchmark report highlights that responsible investing continues to have the greatest dispersion of scores, reflecting that countries are at different stages of implementing responsible investing within their investing framework. Average country scores ranged from 0 to 100.

Over the years, CEM Benchmarking product manager Edsart Heuberger says the GPTB benefited from valuable input from funds that were measured, allowing it to evolve. Of the top 10 transparency leaders, eight engaged closely with the project, filling in measurement gaps of the research and asking for examples of best practices.

The real force that will drive change within an organisation almost always comes from the internal leadership team, rather than from external forces such as regulators, he says.

“My tip is this is a framework that is robust, remains relevant… if funds haven’t made the improvements, the roadmap is still in the public domain.

“The goal was to take public reporting to a much higher level, and given all those stats, I think we’ve accomplished that.”