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Pension World Reels From 'Financial Vandalism' of Falling Yields

  • Funds from Japan to Europe risking losses and benefit cuts
  • Decline in investment returns reduce global pension firepower
Bloomberg business news
Pension Funds Reel From Falling Bond Yields
Updated on

A once-unthinkable collapse in global bond yields is forcing pension funds to buy bonds that offer negative returns -- putting the financial security of future retirees in jeopardy.

U.S. institutions managing trillions of dollars in retirement savings -- including the California Public Employees’ Retirement System -- have been ratcheting down return expectations. Japan’s Government Pension Investment Fund, the world’s largest, has warned that money managers risk losses across asset classes. In Europe, pension funds may be forced to cut benefits in part thanks to the decline in rates.