As the Bank of England gears up for another round of quantitative easing, millions of pensioners, and those on the cusp of retirement, should brace themselves for yet more financial misery, says the boss of the world’s largest independent financial advisory firm.
Nigel Green, chief executive of the deVere Group, comments: “With the Markit/CIPS Purchasing Managers Index today indicating that the recession continued between April and June, it now seems even more likely that the Monetary Policy Committee will seek to boost money supply in the economy through its programme of quantitative easing (QE) on Thursday (5th July).”
He warns this will be disastrous for millions of people with British pensions.
“QE can cripple pension funds as it can fuel inflation, meaning more bad news for savers who’ve already seen their funds dwindle due to high living costs and low interest rates.
“Similarly, this round of QE, like the ones before, will make the vast majority of those who are nearing retirement now, permanently poorer as it will further slash annuities – which are already at all-time lows.
“Annuities are based on gilts, meaning the more expensive they are, the less income investors will receive in return for their pension fund,” explains Mr. Green.
“By damaging pensions and pension funds, and increasing inflation, QE, a supposed ‘stimulus’, could in fact have the opposite effect of what it is intended to do. Quite clearly, it could hinder economic growth by impoverishing millions of British retirees.”
To date, he says, the Bank of England has offered no evidence that the QE has indeed stimulated the economy.
The deVere chief executive argues that the billions which the Bank is poised to pump into circulation should instead be lent directly to small businesses, which he describes as the “lifeblood of the economy.”
He says: “Allowing credit-starved small businesses the chance to invest, jobs and wealth are created. And if the Government simultaneously reduces corporate red tape, growth will be enhanced further still.”