24 Nov '12, 7pm
#peakoil The population conundrum: They were the decades that gave us Gordon Gekko and the Big Bang. The 1980s...
The reasons why stock prices and bond yields fall as the proportion of older adults in a population rises probably has to do with the relative appetite for risk at different ages, economist say. Indeed, in the UK, the most common “lifestyle” fund for pension savings – and the default investment choice for most employees saving via workplace pension schemes – involves a gradual shift away from equities into bonds as the individual approaches retirement age. Upon retirement, savers buy annuities and insurers who sell these policies buy bonds to make sure they can deliver promised cash payments. That suggests that even if the Bank of England reverses its current easy monetary policy, there will be a natural brake on rates.