Bank of England Pension Fund

April 30th 2009

 

The fund’s holding of Index Linked Gilts has shot up from 25.6% of assets to a 70.7% proportion of assets during the same period. That is a big bet of the pension pot owned by everyone who works at the Bank of England. Index Linked Gilts are linked to RPI (the inflation rate) and you buy them if you are worried about inflation. They are seen as the best hedge against inflation.

But Hold on, if deflation is, as the political elite and their some of their ‘client media friends’ and commentators claim, the big threat, why is the Bank of England’s pension fund betting 60% of the £2.2 billion pot on hedging against inflation?  This is their personal pension fund.