Why pensions are bad news for investors

Pensions might seem boring to most investors, but now they are having a direct impact on returns, says Martin Spring in the On Target newsletter. In the US, some large companies such as General Motors face bankruptcy because of fund liabilities, while in the UK, companies are being forced to clear their deficits within a decade. And this is just the tip of the iceberg...

For most investors, pensions are a boring subject. If they're a problem, it's one that lies far in the future. Or it's someone else's problem. And in any case, it's too complex to make sense of (one example: when bonds, a major asset in pension funds, increase in value, that apparently makes the problem worse).

Yet it's a problem that's now lurking at the edge of our radar screen because it's starting to have an impact on investors.

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