“We need to redirect pension funds into infrastructure, climate solutions and growth equity. To achieve sustainable growth, major cities outside of London have to grow.”
That’s what “redirect” means.
“We need to redirect pension funds into infrastructure, climate solutions and growth equity. To achieve sustainable growth, major cities outside of London have to grow.”
That’s what “redirect” means.
As the Bloke in Spain makes the point – it’s surprising how despite the derision he receives here Richard Murphy’s policies are being implemented in the U.K.
As he is the Chief Exec of L&G he could in theory invest his customers cash anywhere he wants. What he probably means is that he wants to get rid of liability matching rules which force him to buy gilts. I’m glad no one is forcing me to buy gilts.
Does that mean that Green Belts should be axed except for London?
English cities outside London contribute less per head to the economy than those in the former East Germany do to the German economy
The former East Germany has been “former” for 31 years
Berlin, Dresden and Leipzig
Berlin is the federal capital, and all three are relatively small.
The way the German economy is currently heading, Ostalgie is likely to be on the up and up.
It’s also cost them a few trillion – t, not b – to get this far too.
No good, he wrote ‘sustainable’, which means it is all gonna be bolx. But thanks for the giveaway word, saves time.
If these were worthwhile investments, pension funds would be piling into them (some, actually quite a lot is already going into infrastructure funds because they claim to be a good match for the liabilities).
I confess that I am unable to imagine what he means by “growth equity” that differs from the mainstream investment for pension funds; it *must* differ because he wants to direct pension funds’ investment into it: can anyone enlighten me?
Infrastructure funds were a big thing in the 19th century. It’s what gave Argentina and India railways ‘n’ stuff.
@Alan Scott – They’ve not bought Gilts. The matching for annuities rules means they can by all sorts of stuff with much higher yields than Gilts. You’re thinking of pension schemes which have to discount at Gilts so pricing of transfers from a pension scheme is on a Gilts + basis where firms like L&G take the liabilities off the scheme’s books for LESS than the scheme thinks they cost.
And then L&G buy houses with it to ensure the rest of us live lives as renters.
@ Andrew Again
Yes, L&G *can* buy assets with much higher yields than gilts to back annuities BUT, if they do so, they have to apply a “risk premium” which pretends that they have pretty much the same yield as, or even less than, gilts when forecasting future cash flows.
So, NO, they cannot take liabilities off the scheme’s books at less than the scheme thinks they cost unless they book a loss at the point of transfer.
What L&G *can* do is reinsure the pension scheme and generate a better-than-gilts return on the insurance premium by investing largely/partially in illiquid low-risk assets (with a higher yield than gilts due to illiquidity which doesn’t matter as they will mature before the last few annuitants die) combined with some gilts for liquidity and some higher-risk, higher-return assets.
You may well ask “Why doesn’t the pension scheme do this?” – and the answer is that the good ones do but due to the headlines on “longevity risk” the sponsoring employer is scared of being caught out with an unpredictable demand for more funding if someone predicts the pensioners are going to live longer, but L&G (or Pru or Aviva) have a natural hedge from all their life assurance policyholders which more than balance out the losses they would suffer on annuities if everyone lives longer.