Sunday, Sep 19, 2010
Pensioners start war on Mervyn King and BOE
Dailymail: Bank's money printing programme to boost economy hits pensions
According to the Pension Protection Fund, which covers members in the event of a default, the 6,653 schemes in the fund saw their position worsen from a combined surplus of £6.6 billion at the end of July to a deficit of £53.5 billion at the end of August.
This means that the funds as a whole could not meet their commitments if they fell due at once.
The fund estimates that every 0.3 per cent fall in gilt yields pushes up a scheme's liabilities by six per cent. In today's values, that would be equivalent to £59 billion.
Yields have fallen by 0.44 per cent since the quantitative easing programme began in March 2009.
They are currently just over three per cent, roughly the same as the annual inflation rate - an extraordinarily low level.
Posted by mark @ 01:02 PM (480 views) Add Comment
3 Comments
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1. drewster said...
The Daily Mail must be terribly confused. Their core readership are both homeowners ("Save our house prices by slashing interest rates!") and near-pensioners ("Save our pensions by hiking interest rates!"). Turns out you can't do both.
The comments below the article show that readers have grasped the problem surprisingly well.
2. mark wadsworth said...
What Drewster says. There is one solution to all their problems though - simply hike taxes on the working population:
1. Increase the state pension
2. More tax breaks for pensions
3. More bail outs for PPF
4. More bail outs for banks
5. Prop up house prices via welfare system
What can possibly go wrong, apart from we are on the wrong side of the Laffer Curve?
3. Taffy62 said...
Why should anyone expect increasing returns from an economy that is shrinking?
The productive economy can only sustain "rent" paid to [non-productive] wealth holders, IF there is a growing economy.
Tsk tsk .... So many people expecting today's economy to pay them ever increasing "rent" for their past work effort and capital grabs.
It's sad, they are trying so very hard to destroy the very Goose that will lay the Golden Eggs for them. The little dear hearts. :(