The retirement plans of millions of Britons have been put at risk after the Bank of England’s controversial plan to create money tore an unprecedented hole in pension schemes.
By Edmund Conway Economics Editor
The Telegraph (UK)
In a mere 24 hours the size of the pension deficits facing some of Britain’s biggest companies has jumped by around £100 billion to a record £390 billion – the equivalent of over £150,000 for every member of a final salary scheme.
The increase is a direct result of the Bank’s announcement this week to create £150 billion and pour it directly into the financial system, experts said.
The ballooning deficits sharply increase the chance that a swathe of companies shut down their pension schemes – not only for future employees but for those already paying into them.
It sparked further criticism of the authorities for endangering the financial future of Britons’ savers in their efforts to bring the financial crisis to an end. The Government and Bank have already been accused of obliterating the incentive to save by slashing interest rates on savings accounts and visibly attempting to stoke up high inflation in the years to come.
The Bank was accused of hammering the final nail into the coffin for Britain’s final salary pension schemes, which have seen their deficits climb in recent years, partly as a result of Gordon Brown’s decision as Chancellor to levy a £6 billion tax raid on pension funds’ dividends.