Sunday, September 19, 2010
Pensioners start war on Mervyn King and BOE
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 Â£6.6 billion at the end of July to a deficit of Â£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 Â£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.