The figures released from the Pension Protection Fund (PPF) show that the aggregate deficit of the schemes it covers rose; with the Bank of England’s quantitative easing scheme being blamed for rising the cost of paying for pensions.
It has been claimed that the quantitative easing scheme has driven up the cost of government bonds, and because they pay a fixed income, reduced the yield that investors gain by buying them.
This has had an adverse effect on pension schemes, as the cost of paying for pensions is often bench-marked against the return on bonds. Therefore quantitative easing has had the knock-on effect of driving up the estimated stock of assets that pension schemes need now, in order to pay all their pension liabilities in the future.
The PPF have said: “Over the month, scheme assets fell by naught point six percent and over the year there was an increase of four point five percent.
“Total scheme liabilities were £1248.2 billion at the end of April 2012, an increase of naught point four percent over the month, and an increase of twenty-five point four percent over the year.”
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