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The Value of Pension Funds Might Drop Significantly Due to Environmental Problems


environmental pollutionA study by scientists at Anglia Ruskin University in Cambridge, UK shows evidence that pension funds might be affected by 2050 due to environmental problems such as water shortage, atmospheric pollution and climate change.

The report entitled “Save our planet, save our pension” draws particular attention to governments and the way they should respond to environmental issues, so that the value of the already invested funds does not get lost.

Aled Jones and his colleagues used models to simulate scenarios according to adequacy of governmental response. The results showed that if the environmental problems are not addressed adequately and fast enough, the officials will have to invest more funds for the purpose in the future. Industry and agriculture will also be affected as a consequence, which will affect the profits and therefore decline the pension funds.

These, alongside with a series of examples and predictions, are published by the UK’s Institute and Faculty of Actuaries (IFA). The main conclusion is that in almost all cases, the value of funds will start falling before 2100. Each economic sector will be impacted, but the most significantly affected one will be the financial sector.

In countries where the environmental problems are already evident will be affected sooner. The worst-case scenario, which considers that the government continues with ‘business as usual’, values are expected to begin dropping as from 2020.

According to Peter Tomplins of the IFA, although the evidence of risk are strong, many of them are not taken into consideration.

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