DMO should issue pension and annuity gilts - Ros Altmann

    Ros is a leading authority on later life issues, including pensions,
    social care and retirement policy. Numerous major awards have recognised
    her work to demystify finance and make pensions work better for people.
    She was the UK Pensions Minister from 2015 – 16 and is a member
    of the House of Lords where she sits as Baroness Altmann of Tottenham.

  • Ros Altmann

    Ros Altmann

    DMO should issue pension and annuity gilts

    DMO should issue pension and annuity gilts

    DMO should issue pension and annuity gilts

    by Dr. Ros Altmann

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    Gerald Holtham’s suggestion that the government should beware of financing tax cuts by issuing short-term bonds is correct. There is a much better opportunity here. Pension funds and insurance companies have been desperate for safe assets that will help them match their liabilities. This is a potential natural source of domestic buying to finance extra government borrowing. Issuing a range of ‘pension gilts’ – some with long durations, some linked to limited price inflation rather than retail prices (pension funds need a floor of zero to offset the risk of deflation), some linked to changes in longevity or mortality – would provide a win-win for everyone. Pension scheme funding would improve, thus helping to protect pensions better, insurance companies’ annuity books could be better backed by safer assets rather than riskier corporate bonds, thus helping annuity pricing and strengthening insurers, and there would be far less need to rely on foreign investors, since there is currently more than enough domestic demand for such gilts.

    Government finances are in trouble, pensions are in trouble, ‘pension gilts’ could help alleviate both problems.

    Yours faithfully,

    Dr. Ros Altmann
    London School of Economics
    c/o 9 Fairholme Close
    London N3 3EE

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