Posts Tagged ‘demographics’

Pension? What Pension?

Recent news that British Telecom (BT) is paying £2bn into its pension fund to help cover its deficit is a fitting reminder of the shortfalls facing many pension funds.  The crux of the matter is that many funds are still living in the past.  The falling nominal interest rates and cheap equity valuations that were redolent of the 1980s led to exceptionally favourable conditions for bonds and equities.  The standard pension fund portfolio of 50% bonds and 50% equities fared very well.

(click on chart for better viewing)

 

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