‘While the Bank made no extension to its QE programme yesterday, its policy of forcing down long-term interest rates has caused huge problems for the pension schemes of many firms, according to Ros Altmann of Saga, the over-50s’ group.
Pension deficits at FTSE 100 firms have more than doubled in the last year alone, despite companies pumping millions into their schemes to repair their pension shortfalls, Ms Altmann said.
“This is turning into a ‘death spiral’,” she added. “The lower gilt yields fall, the worse pension deficits become. The worse pension deficits become, the more trustees will feel they need to ‘de-risk’. This often means buying more gilts which itself means worse deficits because trustees are competing with the Bank of England, which is also trying to buy gilts due to QE.”‘