Quantitative easing knocks further £90bn off UK pension funds

by liamssoft | March 8, 2012 at 01:44 pm

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The policy of QE, using electronic money to buy up government bonds, was started by the Bank of England three years ago in March 2009 to help stave off recession, the total value of the BOE’s Quantitative Easing measures are £325 billion.

The policy has made government bonds more expensive to buy, with lower returns for investors.

This has made pensions more expensive to fund and increased their deficits.

Joanne Segars, chief executive of the NAPF, said: "Businesses running final-salary pensions are being clouted by QE."

"Deficits that were already big now look even bigger because of its artificial distortions.

The NAPF estimates the BOE measures have already created a total £180 billion black hole in pension funds budgets, which they are legally obliged to fill, effectively diverting a huge amount of money from jobs and investment. The latest bout of £125billion of money printing has blown a further £90billion hole in their side. 'We need help managing that, and it will lead to further closures of final salary pensions in the private sector,' Segars added.

http://www.bbc.co.uk/news/business-17287566