The UK’s leading pensions body reacted to today’s announcement of an extra £50bn of quantitative easing.
Joanne Segars, Chief Executive of the National Association of Pension Funds, said:
“Our priority has to be a stronger economy, so we understand the Bank’s case for more medicine. But this short-term stimulus is leaving pensioners and pension funds in long-term pain.
“People who are retiring now are finding that annuity rates have been squashed by QE, and that they will get a smaller pension than they expected. Retirees who get locked into a weak annuity will find that the Bank’s money printing leaves them out of pocket for the rest of their lives.
“For the companies that run final salary pensions, QE is a headache which pushes their pension funds further into the red. This means businesses have to put more money into their pension schemes, instead of spending it on jobs and investment. Our fear is that firms struggling with a weak economy will simply choose to close their pension schemes.
“We think the last hit of QE increased pension fund deficits by around £45bn, and the latest tranche will only add to that bill. The Pensions Regulator needs to set out the details of how it is going to help pension funds cope with QE. Possibilities include extending recovery periods, smoothing valuation results, and postponing valuation dates.”
Notes to editors:
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]