QE knocks pension funds

Tim Wallace
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QUANTITATIVE easing (QE) has pushed down bond yields, hitting pension funds and pushing final salary schemes deeper into the red, two new studies have shown.

Deficits at FTSE350 firms rose £9bn in February to £92bn, according to data published yesterday by Mercer, as falling yields offset the positive impact of rising equity prices.

The National Association of Pension Funds revealed today that final salary schemes across the country have fallen £90bn deeper into deficit since QE started in October, forcing firms to divert money away from jobs and investment and into filling the hole.
Annuity rates on defined contribution pensions have also fallen.

Those retiring with a pension pot of £26,000 will now get 22 per cent less in income than if they retired four years ago, a fall of £440 per year.