Low gilt yields ‘fair redistribution’ of wealth
Standard Life director says resulting low annuity rates fairer for younger generation
Poor gilt yields might be bad news for pensioners but are more fair in the grand scheme of things, an investment director at Standard Life Investments has said.
Speaking at the Morningstar Investment Conference yesterday (15 May), David Millar said in a panel debate that there is more than one side to low gilt yields.
“Maybe it is a redistribution of wealth from the retiring generations to the younger generations,” he said.
“The people who are doing so [retiring] have built up significant funds over their working lives that some of us sitting here might not have on our retirement.”
Millar argued that it would be “politically unpalatable” to alter gilt yields.
Iain Stewart, investment leader at Newton, said any adjustment to yields could cause greater problems in the market.
“It would be a very difficult adjustment,” he said. “The concern I have is about manipulating bond markets is that it distorts everything.”
Gilt yields have been in decline in since 2007, including a sharp drop in 2011.