Quantitative easing sends pension funds further into the red

The latest round of quantitative easing has sent pension funds further into the red, according to the National Association of Pension Funds (NAPF).

Joanne Segars, chief executive of the NAPF, said that quantitative easing has damaged the yields offered by gilts. She added: “The Pensions Regulator must help pension funds deal with quantitative easing by giving them some breathing space. Possibilities include being flexible about recovery periods, smoothing valuation results, and postponing valuation dates.”

The latest Pension Protection Fund (PPF) index showed that the deficit of pension funds is estimated to have increased to £222.1 billion at the end of November 2011, from a deficit of £158.6 billion at the end of October.

Segars said: “The PPF figures are only a snapshot, and can vary greatly from month to month. 

“This does not reflect the long-term health of pension funds, which work over a long timeframe and are well placed to smooth out market volatility. Private sector workers in a final salary scheme should not get too worried by these figures.”

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