More QE a 'Titanic disaster' for pension schemes

The Bank of England's (BoE) second round of quantitative easing (QE) will be a "Titanic disaster" for pension schemes and members, Saga says.

Saga director general Ros Altmann said a second round of QE  would present "major problems" for schemes.

Altmann said: "More quantitative easing will worsen inflation and lower long-term interest rates, which will worsen pension fund deficits and lower consumer confidence, thus actually damaging, rather than stimulating sustainable growth."

She added another round of quantitative easing would be a "Titanic disaster".

"Buying gilts of corporate bonds is not what we need to revive the economy. It may be a short-term boost for bond traders and markets, but it risks a loss of confidence in the BoE's policymaking," she said.

Altmann said the last round of QE failed to boost growth and fight deflation, but in fact only hiked prices and interest rates on borrowing.

"It aggravated the pensions crisis by forcing long-term interest rates down and inflation up, and so pension fund liabilities and deficits have soared, more employers have closed their schemes and British businesses are being forced to find more money to shore up their pension deficits, rather than creating jobs.

"Most pensioners buy fixed annuities which fall in real terms as inflation rises, so QE has aggravated pensioner poverty."