The National Association of Pension Funds (NAPF), whose members managed £800bn of assets, said the new gilts were “too long” Government should be providing more debt with half the term.
Joanne Segars, chief executive of the NAPF, said: “A 100-year bond would be too long for most pension funds, and we don’t think that many would buy them. Most final salary pension schemes are now closed to new joiners and are becoming more mature. Their liabilities are long-term, but not that long-term.
“Pension funds are looking for 30, 40 and 50-year index-linked debt, and would much rather the Government issue more of those. Even if a 100-year bond were attractive in duration, there would be a question mark over whether it would yield a strong enough return for investors.”
George Osborne said the 100 year bonds, which were last issued to pay for the First World War, would allow future generations to benefit from Britain’s “safe haven” status. The Chancellor is expected to unveil the plan at next week's Budget.
The interest rates paid by the Government to borrow money have falled to record lows in recent months, largely due to investors fleeing from the debt crisis in the eurozone and parking money in gilts instead. Despite Britain's big debt pile, the country's borrowing rates are nearly as low as Germany's.
Government debt is currently repaid over a maximum of 50 years. The Chancellor is also considering issuing perpetual bonds - debt that is issued and pays out interest but not the capital sum.
A Treasury source told The Daily Telegraph yesterday: "This is about locking in for the future the tangible benefits of the safe haven status we have today. The prize is lower debt interest payments for decades to come."
The average duration of the Government's £1trillion debt pile is around 14 years.
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Looks like a lot more BoE money printing will happen - they don't even want to pay their debts within reasonable time
