Hedges are in short supply as inflation quickens

UK pension funds want to hedge against rising prices, but the government is not issuing enough bonds


The UK’s pension fund managers need a steady supply of inflation-linked debt to guarantee their ability to pay incomes in retirement, yet demand for the securities far exceeds supply.

Money managers say that the government needs to issue many more bonds linked to the retail prices index (RPI) – the measure of inflation used to calculate pensions in retirement – to meet demand from defined-benefit pension schemes.

Even if pension funds were the only buyers of inflation-linked gilts, the UK

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