QE 'stealing pension assets'

Official fiscal policy of the Bank of England is having a hugely damaging impact on the pension pots of the country's savers.

Director-general of Saga Dr Ros Altmann claimed the pursuit of the quantitative easing (QE) initiative is effectively stealing money from those who are attempting to prepare for later life.

She added that if the coalition announced it was going to pay off high levels of debt and bail out banks that have brought about a nationwide economic downturn by removing funds from savers, there would be an uproar.

However, the expert suggested this is the effect the government bond purchase programme is having and added the impact will be very long-lasting.

Indeed, it was specified annuity rates have fallen and continue to decline as a result of QE, which will have an effect on the majority of individuals who are not investing in final-salary schemes.

Some people may be able to limit the damage done to their retirement fund by seeking pension transfer advice and finding out more about how they can move some of their money into such a scheme.

Simon Rose of campaign group Save Our Savers observed the policy will also have a negative impact on those who plan to retire in the near future or have already finished working.

He stated a pension pot worth £100,000 would have generated an annual income of £15,640 if it was converted to annuity 20 years ago, however, it would only create £5,800 now, with this figure expected to decline further in the wake of the extension of QE by a further £50 billion.

"The amount of income [retirees] will receive from their accumulated pension savings is determined by the interest rates on government bonds - gilts - the lower the interest rate, the lower the pension income paid," Dr Altmann explained.

Ashall Glover Financial Services, pension transfer specialists

Posted by Jonathan Breen