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QE extension 'to harm pensions'

09 July 2012

Individuals nearing their retirement may wish to make plans for their retirement finance after the Bank of England's Monetary Policy Committee (MPC) elected to inject a further £50 billion into the economy through its quantitative easing scheme, which will affect pension incomes.

A report by the Financial Times highlighted the fact that gilt yields have been pushed up over the course of the last few years as the MPC extends the asset purchasing programme.

Annuities

Tom McPhail, head of pensions research with Hargreaves Lansdown, the independent financial advisers, explained another reduction in pension incomes is expected as a result of the announcement of a further £50 billion being put into the economy by the MPC.

"We would expect a further fall in gilt yields following an announcement of additional QE and - in a short space of time - this would be expected to feed through into lower annuity rates," he was quoted as saying by the news provider.

Those who are planning their retirement finances may therefore wish to look into other options such as lifetime mortgages to see if these products can help them to achieve the quality of life they have become accustomed to in their retirement.

Annuities remain a popular choice due to the flexibility they can offer to older people, but equity release schemes may prove to be a more appealing selection to those who have lots of assets but find themselves to be cash-poor.

Pension incomes

Figures from Halifax recently revealed that male pensioners are better off than their female counterparts, with men found to be receiving a higher pension on average than women.

Martin Ellis, economist at Halifax, explained that even though the gender gap has been closing over the course of recent years, significant differences are still evident.

Those who want to find out more about unlocking money from the value of their home could use the equity release calculator from Key Retirement Solutions to gather information.