Pension Funds have Lost 50% with Bonds: Now Crisis Starts!

This is terrible for most pensioners and retirees in the world. The Bond Market Collapse has now become a serious problem for pension funds which invest primarily in what they thought are risk free assets like long maturity government bonds. So exactly those instruments that have suffered the biggest declines with up to minus 50% of losses. This is probably one of the biggest financial tragedies of our time as people´s retirement savings have been whipped out. So I have tried to raise awareness for this tragedy in the making since the first Banking collapse around March 20 23 because nobody else in the media talked about this problem. And this has become an even bigger problem now is because beside Banks, the holders of long maturity bonds are primarily pension funds. These funds have entire pension portfolios packed with these bonds that have lost 50% of their value. And in particular those folks are affected who were trying to go the, what they got told, safe side way by not investing much into the stock markets but in those government bonds. Because hey government bonds are risk free, right? What a disaster. So we have here as an example this guy, David Norton who was said to be on his happy way to retirement with a pension pot worth a quarter million British pounds. Who when he came closer to his retirement date was told to invest into what they told him, less risky investments than stocks. Well as it turned out, these bonds have lost a lot more than stocks for now. Stocks will follow with similar losses soon. But for now, his pension fund has lost about 75000 pounds or a third of its initial value, down to 163000 pounds. The Scottish Equitable Retirement fund, which was managing his pension has lost more than 40 percent of its value. This means more than 450 million pounds have been wiped off the value of savers’ pensions in this fund alone. Here are a few more examples from the article. The Aviva Pension Pre-retirement Fixed Interest pension fund has lost 33.4 percent. And the Clerical Medical’s Retirement Protection Pension, which invests almost exclusively in UK Government bonds, has lost a staggering 52 point 3 percent. So as a given rough estimate it is assumed that combined more than 6 billion pounds have been wiped from the value of older workers’ pensions for this type of low risk bond funds in the UK alone. I am pretty sure that this is a similar devastating problem in countries like the United States or in Europe as well. Not only did a lot of pension funds invest into these long maturity government bonds that have lost most of their value, but some of them did this even on leverage. Because interest rates were near zero. Why not to borrow 100% of the pension money they manage to then invest that into risk free government bonds to double their returns? What could possibly go wrong, government bonds are risk free so they thought. Well, this is just the beginning and a scratch on the surface of the damages that have been done to all these people who trusted their pension fund providers and investment advisors. Most likely there is a lot more to be uncovered in the next couple of years when more and more people are reading their pension fund statements and are guaranteed a rude awakening when they see the numbers of what is left from their nest egg. What is clear though is that these pension fund managers are incapable of managing other people’s money. Every first semester knows that if interest rates are raised, then the value of older bonds, that still have a lower interest rate than the new ones, will decline in value. I mean that is kind of logical, right? Why would you want to buy an old bond which yields you less than a new one? And as the Central Banks worldwide have pushed up interest rates the fastest way in history and to levels we have not seen in like 20 years, it should be no surprise that bond valuations have outright crashed as a result. Now what I find really disgusting is the way the media talks down this complete failure with statement s like this. It’s a very good idea to put retirement off a little because the longer you are invested, the more chance you have for recovery. If you draw from your pension then you lock in that loss and it becomes real, but until you touch it, it is just paper loss. This is probably one of the biggest scandals and wealth transfers in history. And unfortunately there is no recovery from this. The money will be gone as this is just the beginning of the Financial System´s collapse and nobody will be jailed for this.