Pension funds and the UK economy

Document description

The paper considers the impact of UK defined benefit pension scheme funding and investment on the UK economy. It suggests that many conventional theories are based on incomplete or inconsistent economic theory. In particular we suggest that: an economy cannot really gain competitive advantage from high returns on the domestic assets in which pension funds invest\; defined benefit liabilities are essentially similar for most schemes, and can be matched with bonds\; funding pension liabilities has no primary impact on levels of consumption or investment\; pension funds are not natural investors in the equity of new ventures, changes to benefit design could have some impact on the levels of such investment, but this is unlikely to be significant.