The Anonymous Widower

QE is Bad For Your Pensions

I don’t mean dear old Liz, as I think the longer she lives, the better it will be for the economy and my pension.  But the link is the opposite with Quantitative Easing, which according to several commenators will mean that long-term annuity rates will fall. This article is from CityWire. Here’s an extract.

On the one hand there has been uproar from some experts about the impact on people’s pensions. This is because QE is used to buy back government bonds, or gilts, which reduces their yields and in turn lowers annuity rates, which are linked to gilts and which determine the amount of pension many people receive.

However, others argue that annuity rates were already dropping before QE begun; that while we are hostage to the broader economic backdrop which includes QE, the eurozone crisis is what really matters. ‘It’s the broader backdrop that is most relevant,’ said Tom McPhail of Hargreaves Lansdown.

It doesn’t look good does it. I suppose I could put in a stove that burned paper and just put my pension in it, a bit at a time. I would at least be warm.

On the other way, I’ve sort of created my own annuity using Zopa, where I put the money I got from selling C’s Boxster.

February 9, 2012 - Posted by AnonW | Finance | Pensions, Zopa