Quantitative Easing – Who Pays the Price?

Quantitative easing. Not easy to say, but seemingly becoming ever easier for the Bank of England to do. QE (or money printing as it’s known when Zimbabwe does it) allows the Bank of England to buy UK Government Debt and suppress the interest we as a nation pays on the huge sum outstanding. This apparently saves the country money, well at least in the short term. But surely someone pays?

Savers will certainly be aware that they are already paying for QE with interest rates on Deposit based Savings lower than inflation at present, even before it is taxed.

The others paying the price for QE are those approaching retirement with Personal or Stakeholder Pension Plans, or with Defined Contribution Scheme membership, who are finding historically low Annuity rates (the conversion factor of pension funds to income), or the Income Drawdown maxima ever-falling.

It is more vital than ever to shop around for the most favourable Annuity rates and to be aware of other options available in respect of non Final-Salary Pension funds at retirement. An increasing number can now gain an enhanced annuity rate due to past or current health or lifestyle issues, such as smokers, diabetics, those with a high BMI or hypertension. Temporary Annuities are another option, or one backed by an investment element.

Only an Independent Financial Adviser can provide you with all your options on an impartial basis. If you, or someone you care about is approaching retirement please contact us to seek the most appropriate Pension options.