Bank report claims pensioners benefited from QE programme

Ben Southwood
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THE BANK of England yesterday hit back at critics who claimed its quantitative easing (QE) policy has harmed pensioners, saying they were actually the main winners from the asset purchase programme.

A report from the Bank, commissioned by the Treasury, argues that QE boosted bond and equity prices. It said this consequently inflated the wealth of asset holders, who tend to be older, leading the Bank to claim that older people had benefited the most.

The Bank also argued that without the QE programme, the economy would have faced a deeper slump. “Economic growth would have been lower. Unemployment would have been higher. More companies would have gone out of business,” the report stated.

It stressed how this would have harmed everyone, including savers and pensioners.

But critics were not convinced. “There can be no doubt that QE has made millions of pensioners permanently poorer,” said Nigel Green of financial adviser DeVere. He said that QE drove down the yield on gilts, increasing pensions’ liabilites.

But the Bank said these opponents were ignoring one side of the balance sheet. Funds’ liabilities had increased, but so had their assets, and at a rate that compensated them fully, it said.

Pension expert Ros Altmann said QE had pushed up inflation meaning the impact on real incomes and spending power of Britain’s retirees had been damaged. “The Bank seems oblivious to this effect,” she said.