Pension funds must invest in alternative asset classes that help to redistribute global wealth as well as offer pension scheme members a strong return on investment, according to Sir Bob Geldof.
As part of his speech, ‘Make a difference’, which he delivered at the National Association of Pension Funds’ Annual Conference 2014 in Liverpool on 15 October, he said: “I think the future is entirely up for grabs and whatever benchmarks [pension funds] use as to whether a person has got a future, whether [they] have got a short-term or long-term life, I’m not sure that that is appropriate any more.”
“It is not that the systems [the industry] built are no longer sustainable, they simply are not [sustainable],” he added.
He called on the pensions industry to focus on asset classes that offered longer-term investment returns, such as renewable energy and infrastucture, as part of its overhaul.
“It is necessary that what [the pensions industry] is focusing on now is infrastructure because bonds [and] gilt yields are ridiculous,” he said.
He added: “The banks are once again slicing and dicing their derivatives…and rebuilding the stock that brought us to ruin a mere four years ago, almost as though we have learnt nothing.”
Geldof attributed pension funds’ current lack of alternative investment to a retreat from globalisation by the US and Europe. “The demography of Europe is collapsing. In Germany last week, the government said it now needed positive immigration and by that they mean workers, which is completely contradictory to what we hear in this country.”
He went on to highlight the investment opportunities in Africa.
He said: “You probably won’t believe me and you’ll probably think I’m going on about Geldof Africa, of course, but within five years [Africa] will have the largest working age population in the planet, more than China and more than India.”
He added: “Whether [the pensions industry] likes it or not, [it] is going to be looking at asset classes that [it] has never even considered in [its] wildest dreams.”
Geldof concluded by calling on the pensions industry to navigate a future that is fair, equitable and collaborative with other economies.
”The defining matrix of the twenty-first century must be [based on] cooperation, consensus and compromise – all things that our political and legal systems back away from, but what’s the alternative? Competition. That defined the twentieth century and look what it spawned.”