The big flaw in that argument in so far as it supports to notion of intergenerational conflict, is that pension funds take the money of young people and invest it so they have a pot of money to support their retirement, whereas retired people no longer have the capacity to put new money into the pot but are more likely to have a decent sized pot. Both have a big incentive for their pot to grow but the pot of young people has to grow more. Low rates on a large pot bring in more money than high rates on a small pot. That's why older people tend to be more cautious investors than the young. They can't recover losses and can get by on a more
limited income. Emerging markets tend to be more risky. You can argue that the retired have less economic incentive to promote domestic growth with the accompanying jobs, but I'd say that older people have children who they want to do well and are as much interested in the general quality of their national life as younger people. So I don't see that the incentives work in the way suggested. Both the last and the present UK governments are seeking reform of pension investment practice so that it can take more risks and invests in Britain rather than sticking to very safe investments such as government bonds.
Great piece on the decline of the ‘west’. Maybe the only thing we learn from history is that we …
The big flaw in that argument in so far as it supports to notion of intergenerational conflict, is that pension funds take the money of young people and invest it so they have a pot of money to support their retirement, whereas retired people no longer have the capacity to put new money into the pot but are more likely to have a decent sized pot. Both have a big incentive for their pot to grow but the pot of young people has to grow more. Low rates on a large pot bring in more money than high rates on a small pot. That's why older people tend to be more cautious investors than the young. They can't recover losses and can get by on a more
limited income. Emerging markets tend to be more risky. You can argue that the retired have less economic incentive to promote domestic growth with the accompanying jobs, but I'd say that older people have children who they want to do well and are as much interested in the general quality of their national life as younger people. So I don't see that the incentives work in the way suggested. Both the last and the present UK governments are seeking reform of pension investment practice so that it can take more risks and invests in Britain rather than sticking to very safe investments such as government bonds.