So, he’d have everyone using 1% bonds to save for their pensions.
What has happened to pension fund deficits as yields rose? The present value of the liabilities have collapsed. Asset values have hardly flourished, but they have fallen less than the present value of liabilities. The net result is ballooning surpluses all around. According the PPF, around half of DB pension schemes had surpluses (valued as per section 179 of the Pensions Act 2004) at the end of the first quarter 2021; that proportion rose to 85 per cent by the end of September. The aggregate s179 funding ratio is now up at 135 per cent — by far and away the highest in the series history.
Higher interest rates mean you’ve got to save less now in order to have a pension later.