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AIMA parliamentary reception discusses how hedge funds can help close ‘pensions gap’

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A reception at the UK Parliament hosted by the Alternative Investment Management Association (AIMA), the global hedge fund association, has heard how hedge funds can help pension funds to close the “pensions gap”.

Speaking at the reception were the Labour MP Dame Anne Begg, Chair of the Commons Work and Pensions Select Committee; the Labour MP Chris Evans, Parliamentary Private Secretary to Chris Leslie MP, Shadow Chief Secretary to the Treasury; Kathryn Graham, Head of Strategy Co-ordination for the Universities Superannuation Scheme (USS), one of the UK’s biggest pension funds; and Jack Inglis, CEO, AIMA. The event drew more than 30 MPs and advisers from all parties, as well as representatives of think tanks, pension funds and AIMA manager members.
The “pensions gap” refers to the difference between what people need for an adequate standard of living in their retirement and the pension amount they can currently expect to receive. It is considered a particularly acute problem in the UK, with roughly one in three of the UK’s working population thought to be affected.  
Jack Inglis, AIMA CEO, says: “We believe that hedge funds can be a vital means of reducing the pensions gap. The low interest rate environment which is likely to persist over time adds another challenge to the ability of pension funds to deliver on their basic objectives, since returns on traditional assets such as bonds are being squeezed. It is therefore not a surprise that pension fund managers are increasingly turning to investment management alternatives such as hedge funds.
“As hedge funds have outperformed traditional assets such as stocks and bonds over the last 20 years, with less volatility and risk, they are now considered to be a safe and stable way to achieve returns and preserve capital.” 
The parliamentary reception also marked the launch of “The Way Ahead: Helping trustees navigate the hedge fund sector”, a joint paper by AIMA and the CAIA Association which found that pensions and other hedge fund investors have earned around USD1.5 trillion from their hedge fund investments since 2005. The paper also found that one in every four dollars managed by hedge funds today is invested by public and private sector pensions.

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