Pension fund efficiency performance between US and Europe

Pension funds are growing rapidly in importance in developed countries as their demographic population ages faster than the contributing work force. The ability to sustain the national pay-as-you go systems has led to a rapid growth in fully funded pension funds and the search for higher returns. The growth has been more pronounced in th US and UK than in Europe, particularly in the US where there are more choices of pension funds and performances. The market for pension fund is important as an investment vehicle for the working segment of the countries. The ease of technology is aslo making investment for retirements more accessible. Moreover, the choices of pension funds available is not limited to domestic but also to sector funds with domestic or global or social choice alternatives. However, the question is whether US pension funds are more efficient in their performance and returns than European pension funds. Both US and European pension funds are operating in sophisticated financial markets. The characteristics and focus of US pension funds may be different from European pension funds leading to differences in efficiency and returns. This paper looks at a comparison of pension fund efficiency and returns between US and European fully funded pension funds. Emerging markets are also growing in importance both as a destination of pension fund investment and as a growing market for their own domestic investors. The paper also explores the characteristics of funds allocation in developed versus emerging market asset classes and if allocation characteristics have any impact on performance and efficiency.