Second, people want certainty and pensions do not give it. I have long argued that infrastructure and employment generating bonds provide such certainty. I still think if people could invest in their local communities they would, and likewise if they could invest in the NHS – which they know they will need in their old age – they definitely would. The rates of return paid could be a lot lower than PFI and still provide a fortune in savings for public sector infrastructure costs and a fair return to pensioners.
Third people want to invest in housing and we need a lot of it: social housing funds could be the basis for pension arrangements for a long time to come and provide enormous social worth to the UK.
Will this happen? I doubt it, very much.
Should it happen? Yes, I think it should and I very strongly suspect many of us would be very much better off as a result, including all those about to be enrolled in new state sponsored pension arrangements that will all be ‘invested’ in conventional stock market based portfolios and no doubt will be lost for future generations of pensioners in this country as a result. Such arrangements belong to the past and simply fatten the City at cost to the rest of the economy.
A slight problem here.
Who or what is this “City” referred to here? Why, The City is the name we give to the assembled financial experts who allocate savings around the economy. So Ritchie’s arguing that we must take that function away from the people who currently do it, and make sure that the money is invested into infrastructure projects and social housing. And the people who do that allocation will undoubtedly be entirely different people from the people who currently do the capital allocation of putting pensions savings into houses, stocks, bonds and projects.
Entirely different people doing an entirely different thing. No doubt about it.
This is at least better than his suggestion that 25% of pension funds must be invested in new businesses: that would mean turning it all over to the venture capitalists.
And, seriously, who in buggery would suggest investing in bonds over a 30 year time scale? Hasn’t the bloke ever heard of inflation?