AJ Bell reveals impact of quantative easing
Quantitative easing will result in another cut in pensioners’ income, warns Sipp provider.
AJ Bell warns about the negative impact the latest round quantitative easing will have on pension incomes.
Billy Mackay, marketing director of AJ Bell, said: “The need to stimulate the economy is only too clear but an unfortunate side-effect of quantitative easing is that it will result in another cut in pensioners’ income at a time when they can ill afford it.”
Last week the Bank of England shocked markets by announcing a £75bn second round of quantitative easing.
Quantative easing involves injecting money directly into the economy to meet the Bank of England’s inflation target.
Mr Mackay said: “This comes as a real blow because gilt yields were already at record lows before this £75bn stimulus package was announced. It’s entirely feasible that this will lead to further falls and heartache for people reviewing their pension drawdown or considering buying an annuity.
“Everybody appreciates the need for action on the fiscal challenges the government faces.
“However, you can’t ignore the impact of unintended consequences and action is needed to address this issue. We have been calling for changes to the drawdown income rules, this only adds fuel to that argument.”
