Retirees facing pension penury after QE

Ben Shaw, development director of the Occupational Pensions Trust, said: “The government’s announcement to enter a third round of quantitative easing has failed to take into account the difficulties it presents for pension schemes.”

He mirrors the position taken by Joanne Segars, chief executive of the national Association of Pension Funds whereby he predicts QE will affect company pension schemes harshly.

“In a climate where gilt yields are at an all-time low, QE serves to artificially increase the liabilities of pension schemes and will result in employers having to contribute higher amounts. Unfortunately, this comes at a time when many employers are struggling to contend with a weak economic environment.”

In a statement, the Monetary Policy Committee predicted the £50bn expansion would take three months to reach completion and the Bank of England will keep the overall scale of the QE programme “under review”.

Within the mortgage arena, as expressed by Building Societies Association director general Adrian Coles, although the QE was an expected development, it may not do enough to relieve harsh market conditions.

Pessimism over the latest round of money-printing reached into the investment world. Simon Ward, chief economist at Henderson, who predicted the BoE will continue to exceed its inflation target of 2 per cent in the medium term, regardless of £2.8m on spent upgrading economic models.