Pensions

In this post I do little more than paraphrase a concern of Robin Blackburn as expressed in his book “Banking on Death.”

If pension funds focus largely on securing the best return on the capital that they are entrusted with then they could contribute to a bizarre situation in which:

Pensioners in region A receive a handsome return on their capital funds but region A becomes a less desirable place because their pension funds did not consider investing locally because of the obsession with maximising a narrowly conceived ‘return on capital.’ When pension funds invest ‘elsewhere’ then the multiplier effect also occurs ‘elsewhere’. Investing locally may not always appear the best use of capital when measured in purely monetary returns but it is surely better to receive £100 a week from a pension and live in a vibrant economy* rather than receive £150 a week but live in a place from which you want to escape as soon as you can**.

*with such vibrancy attributed to pension funds investing with a local bias.

** because the pension funds chased monetary returns and paid little attention to the wider benefits of local investment leaving region A with high unemployment and crime.