Who’s Up For Managing a $1 Trillion Pension Fund?
An ingenious proposal to consolidate U.K. corporate pensions into three mega-funds has a lot going for it. But there are potential costs for taxpayers.
How to give retirees more security
Photographer: Ian Forsyth/BloombergA proposal to mash together all of the U.K.’s corporate pension plans into a handful of mega-funds with more than 2 trillion pounds ($2.8 trillion) of assets promises to revitalize the London stock market, give retirees more security and boost the British economy all in one go. This ingenious idea has some logic, and a wrinkle.
Investment banking boutique Ondra Partners is suggesting that the U.K.’s defined-benefit corporate pension plans — numbering more than 5,000 — merge into three national vehicles. The sheer scale of these platforms would facilitate investment strategies that deliver better returns, it says, helping solve the problem that a majority of U.K. retirement programs have liabilities exceeding their assets.