Your current web browser is outdated. For best viewing experience, please consider upgrading to the latest version.
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
search DONATE
Close Nav

Hardly a Surprise: Pension Funds Stoked the UK Rout

back to top
commentary

Hardly a Surprise: Pension Funds Stoked the UK Rout

Bloomberg Opinion September 30, 2022
EconomicsFinance

The UK's economic troubles appear to be a story of fiscal recklessness that's forced the nation's central bank to step in to stabilize crashing financial markets by buying up government bonds. Are we talking about the UK or Argentina? The real story is actually more complicated. It all comes down to pensions, furthering my pet theory that everything in life comes down to pension accounting.

The market for long-term government debt in the UK has always been a little funky. Their yield curve is normally concave, instead of upward sloping like most countries, because pension funds are big buyers of the debt. British pensions have £1.5 trillion ($1.65 trillion) in assets, and about 20% of the assets are held in direct gilts. As of the first quarter this spring, pensions owned 28% of outstanding UK debt, with an especially heavy presence in the long end of the curve. Private-sector pensions hold just under £100 million in gilts with maturities over 25 years.

Continue reading the entire piece here at Bloomberg Opinion (paywall)

____________________

Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.

Photo by gopixa/iStock

Saved!
Close