UK pension funds buy a lot of bonds. Together with insurers, the UK fund industry is reckoned to hold 35% of outstanding gilts issuance – which would add up to around £250 billion. This hunger for bonds is driven by tough domestic rules on accounting and solvency, which encourage long-dated liabilities to be matched with long-dated assets.
The picture across Europe has always been a little different. Now, proposed new accounting rules could encourage Europe’s pension funds to switch a greater pr