Climate change and resource scarcity may wipe out pensions industry

cepheus

Climate change and resource scarcity may wipe out pensions industry

New report from Anglia Ruskin University shows that actuaries, charged with risk management in the financial sector, have ignored the greatest risk of all time

How could actuarial professionals, tasked with risk management in the financial sector and beyond, have ignored the biggest risk humanity has ever faced?.......

The Resource Constraints research report, published by the Global Sustainability Institute at Anglia Ruskin University, is blunt and worth quoting: "The more extreme scenarios modelled represent financial disaster; the assets of pension schemes will effectively be wiped out and pensions will be reduced to negligible levels."

Let's be clear what that means. Millions of people in the UK alone will lose their entire nest egg and will be forced to rely only on their basic state pension at a time when prices of basic staples such as food, energy and water are rocketing. There will be no bail out by the government because it won't have the financial capacity to help on such a scale...

atush

A pension would be the last of your concerns under some of these disaster scenarios.


Buying in canned goods, water, a generator and getting a shotgun license should be your priorities

dunstonh

How could actuarial professionals, tasked with risk management in the financial sector and beyond, have ignored the biggest risk humanity has ever faced?.......

Resource scarcity would likely see the assets of companies involved in those areas increase in price. So, the value of those companies would increase making the value of investments go up. Humans move on and adapt. As one technology comes to an end, another steps up and takes over.

Linton

How could actuaries could mitigate these risks?

I know!!!! Gold, gold, lots of lovely gold.

Jack_Griffin

Linton wrote: »

How could actuaries could mitigate these risks?

I know!!!! Gold, gold, lots of lovely gold.

Just like the massive gold reserves the country has got, hold on wait a minute Mr Brown sold them off at the bottom of the market... ho hum. Forget I ever said that.

grey_gym_sock

dunstonh wrote: »

Resource scarcity would likely see the assets of companies involved in those areas increase in price. So, the value of those companies would increase making the value of investments go up.

that's possible.

it's also possible that governments would capture the increased price through higher taxation of scarce resources.

it's also possible that governments will restrict the use of scarce resources. and if demand were suppressed, prices wouldn't be expected to rise. and if resource-owning companies also aren't allowed to sell all their resources, their value would fall.

a lot of this is about how both markets and governments will respond to resource limits. there are very different ways it could turn out. it does matter what we do. the report is attempting to point a way for actuaries to contribute to this.

there's a much fuller version of the report here: http://www.actuaries.org.uk/research-and-resources/documents/resource-constraints-sharing-finite-world-evidence-and-scenarios-fu

cepheus

A recent report indicates that as much as half of all the food produced in the world – equivalent to 2bn tonnes – ends up as waste every year. So perhaps if we use less of everything, we will need to earn less?

I think a great deal of economic activity is unnecessary and provides fictitious wealth.

bigadaj

This can be argued either way, the real problem is global over population, current estimates assume that population will level out at ten billion, and even at this level resources will be scarce and or expensive so a more direct issue than pensions.

grey_gym_sock

well, population is part of the issue, but many resources would be exhausted even at the current rate of use in a matter of decades. this is exacerbated both by growing population and by the expectation of ever-rising wealth per person.

there are certainly bigger issues than pensions. actuaries are expected to advise on pensions, so mentioning pensions makes it relevant to them. but i think they could contribute something useful to a broader debate.

cepheus

bigadaj wrote: »

This can be argued either way, the real problem is global over population, current estimates assume that population will level out at ten billion, and even at this level resources will be scarce and or expensive so a more direct issue than pensions.

Nearly all resources are consumed and emissions produced by a rich elite of around a billion people, the remaining six billion can be an excuse on which to blame our excesses! I agree though those six billion are increasing and they will attempt to reach the affluence of the one billion, so this sector will generate a longer term problem.

Blackbeard_of_Perranporth

Hawks, scaremongerers and bandwagon jumpers