In light of the Bank of England's Monetary Policy Committee (MPC) announcement today, Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association has commented:
“The Bank of England’s decision to cut interest rates will give pension schemes cause for concern. They have been battling historically low interest rates for over eight years and further cuts will put them under even greater pressure. While we recognise the need to protect the UK economy, strong consideration needs to be given to the negative impact this will have on the 6,000 private defined benefit pension schemes helping some 11 million savers.
“The introduction of further quantitative easing (QE) will also put pressure on pension schemes. We recognise the level of QE is significantly lower than previous rounds and that the Bank of England is using some of the programme to purchase corporate bonds. As these bonds are higher-yielding instruments they could provide more stimulus than the same amount of gilt purchases, but nonetheless the impact this will have on gilt yields will be an additional burden for many schemes already struggling.
“Given the current economic conditions we are calling on the Pensions Regulator to use its existing powers to take a proportionate and flexible approach to scheme funding in these uncertain times. It should give particular consideration to schemes going through a valuation cycle at the moment.”
NOTES TO EDITORS:
PENSIONS AND LIFETIME SAVINGS ASSOCIATION
We’re the Pensions and Lifetime Savings Association, the national association with a ninety-year history of helping pension professionals run better pension schemes. With the support of over 1,300 pension schemes and over 400 supporting businesses, we are the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels.
Our purpose is simple: to help everyone to achieve a better income in retirement. We work to get more money into retirement savings, to get more value out of those savings and to build the confidence and understanding of savers.
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