Bank of England Delivers Another Hammer Blow for Pensioners and Savers

The Bank of England has delivered “another painful bloody nose” to pensioners and savers on Super Thursday, affirms the chief executive of one of the world’s largest independent financial advisory organisations.

Nigel Green, CEO and founder of deVere Group, is speaking out after the Bank’s Governor, Mark Carney, today unveiled a raft of measures aimed at preventing a recession following the Brexit vote.  These included cutting interest rates to 0.25 per cent and boosting Quantitative Easing (QE) by £60bn.

Mr Green comments: “By pulling the trigger and cutting interest rates for the first time in seven and a half years today and boosting QE, the Bank of England has delivered yet another painful bloody nose to pensioners and savers.

“This really is a toxic combination for millions of people who rely on pensions and savings.

“With interest rates now at their lowest since 1694, gilt yields will fall further.  These yields are already incredibly low and by falling even more, pension deficits will increase further.  This is extremely concerning because there is already a mammoth £935bn black hole in defined benefit pension schemes.

“The scale of these deficits casts doubt on the survival of many company pension schemes and in order to survive they will need to make drastic changes to the terms of employees’ pension schemes.”

He continues: “Savings rates are again being driven down and are at historic lows. Many people were relying on income from their savings to top up their pension income, but have found that monetary policy has hit their savings as well as their pensions.

“The misery is especially acute for those retiring now who are to buy an annuity. The income from an annuity is linked to gilt rates, so annuity rates are also at record lows.”

Mr Green adds: “The Bank of England’s policy of ultra-low interest rates and large-scale money printing is also perhaps particularly worrying for the millions of British expat retirees. Not only do they face the same serious challenges of pensioners and savers in the UK, they also have to deal with the impact of a falling pound.  The drop negatively hits their fixed income, meaning that life becomes more expensive in their countries of residence.”

The deVere CEO concludes: “The Bank of England’s announcement is another hammer blow for pensioners and savers.  I would urge people to review their financial strategies sooner rather than later to see what can be done to mitigate the devastating impact the policies could have on their hard-earned nest eggs.”