UK pensions: Incomplete logic

UK pension funds are desperate for long maturity inflation-linked government bonds. The UK government could save lots of money by issuing vast quantities of these bonds in exchange for outstanding debts with shorter maturities. It sounds like a win-win solution. But it’s not really. At first, both sides might well be pleased. Pension funds are anxious to match assets to liabilities, for the sake of their new regulator and for the stability of their funding companies’ income statements. As for t...