Excellent article on pension funds and the effects of negative yielding bonds on retirement plans. If you were counting on a pension for the lion’s share of your retirement income you might do well to formulate a back up plan. This doesn’t even touch upon the subject of underfunded pension plans, and all of them are underfunded.

“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.”…

“The true madness is pension funds being forced to invest in assets which will be guaranteed to lose, such as in the case of long dated inflation-linked gilts at real yields of -3%,” said Mark Dowding, chief investment officer at BlueBay Asset Management, which has pension-fund mandates. “It is financial vandalism and the government and central banks need to wake up to this.”…

“One way out of the pension quagmire is to allow more retirement funds to invest in “real assets in the real economy,” said Wilson at Legal & General.”…

Source: Pension World Reels From `Financial Vandalism’ of Low Yields – Bloomberg