Sir Nigel says that pension funds are increasingly pulling back from stocks and investing instead in safer but less lucrative assets such as bonds, in a growing problem known as de-equitisation.
Figures released earlier this year by the think tank New Financial showed that 53pc of pension funds’ total assets were invested in UK stocks in 1997, but this had plunged to just 6pc in 2021 as money was shifted elsewhere.
As a result, British pension funds and insurance companies now own just 4pc of the stock market, down from 39pc in 2000. The trend risks undermining the economy while also leading to lower returns for workers saving into pension funds.
What’s really happened is that the “pension funds” have closed to new entrants. Most of those private sector defined benefit funds are now in run off. They’re feeding pensions to retirees, not saving money up for the next generation of them. Sure, there have also been G Brown’s idiot changes and so on. But funds in run off should – perhaps – be in bonds not equities.