Baroness Altmann on impact of QE on pensions

Trustees Agenda posted on 8 June, 2017

Baroness Ros Altmann has claimed that the negative effects of quantitative easing (QE) on pensions have been significantly underestimated.

In a speech to the Economic Research Council, Baroness Altmann said "For each one percentage point fall in long rates for an average duration pension fund, the liabilities will rise by 20%. But the same one percentage point fall in long rates is expected to increase asset prices by only 6-10%, opening up the deficit which is currently a total of £500bn for UK pension funds. Billions of pounds of deficit financing contribution funds has gone into these schemes. Yet the deficits have still gone up and the more QE keeps long rates down, the more the deficits have been rising, causing a vicious spiral."