Putting pensions to work: Economic easing and the role of pensions in promoting growth
Banker and asset manager Kees de Koning proposes a new scheme, which he calls economic easing, which would rechannel the cash locked up in pension funds towards increasing productivity among British businesses.
Positive cash flow is the key to sustainable economic growth for any participant in the economic process, be it a government, bank, company or individual. The UK government, the banks, individuals in general, and the overseas importers are currently not in a strong enough cash-flow position to spend more. This leaves pension savings cash flow as the only viable non-inflationary source of funds for economic expansion.
If the government, the private sector and pension fund managers can agree to work together then this economic easing scheme would help to ensure that companies have the funds available to expand in the most economically sensible way: by increasing share capital ringfenced for longer-term growth investments. It will also facilitate a more efficient deployment of pension savings cash flow in the company sector, a desirable objective for long-term pension savers.
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