His underlying thrust is that funded pension schemes are necessary to cope with developing demographic trends in the West (namely fewer workers supporting a larger number of ex-workers).
Sadly, funded pension schemes will not allow such an escape. Pensions are a "save-now-redeem-later" investment. According to the patterns Mr McRae identifies there are more savers now than redeemers. That trend will change, dramatically, in the early years of the next millennium. At this point people reaching retirement age will seek to sell their (generally) equity-based pension schemes and there will be insufficient new savers to purchase the assets being sold.
If welfare funds become a new "net investor" in the stock market the problem will worsen. This issue is quite general. For the last decade or so in the UK (and longer in the US and Japan) there has been a net investment in funded pension schemes. Because the number of investors in such schemes exceeded the number cashing in their pensions there has been a pent-up demand for equity investments that has driven stock prices up. In 20 years' time demographic patterns dictate that this will re- verse and sellers, out-numbering buyers, will force buyers down. This will harm our children who will be forced to invest in a structurally falling market.
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