Gilt yields are at their lowest for 40 years. How will they evolve? We consider four scenarios, two of which involve losses of 20%, and discuss the implications for pension schemes.

Commentators are divided as to why gilt yields are so low, and how they are likely to move. This paper presents a nuanced analysis. It argues that that many factors play a part in determining the outcome for pension schemes, including the level of inflation protection in a scheme, the wider economic and social causes of rising bond yields and the performance of other assets.

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