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April 18th, 2012 
FAKE NEWS for the Zionist agenda - Treasury report reveals crippling impact of Bank’s decision to pump £325bn into the economy
By
Becky Barrow
16:41 EST, 17 April 2012
|
19:51 EST, 17 April 2012
Millions of thrifty pensioners who have had their retirement plans shattered by the Bank of England should be given compensation, MPs say today.
A damning report lays bare the crippling impact on the recently retired and savers of the Bank’s decision to pump £325billion into the economy.
Since so-called quantitative easing began three years ago, campaigners have highlighted how older people have become the sacrificial lambs of the Bank’s emergency rescue policy. The aim of QE has been to keep interest rates low to boost economic growth, prevent a wave of mortgage repossessions and pump money into the flagging economy.
Victims of quantitative easing: Pensions took a major hit when the Bank pumped £325billion into the economy three years ago (picture posed by models)
But today the Treasury select committee makes it clear that an urgent lifeline must be thrown to those hurt by QE.
It also highlights the plight of savers since the Bank cut the base rate to a historic low of 0.5 per cent in 2009, describing the combination of low interest rates and QE as ‘extremely lax monetary policy’.
The report says: ‘We recommend that the Government consider whether there are any measures that should be taken to mitigate the redistributional effects of QE.’
It calls on ministers to ‘consult’ on any help, such as compensation, that could be given at the time of the Autumn Statement, expected in November.
MPs also want the Bank to publish its estimate of ‘the overall benefit and loss to pensioners and savers’ from QE.
For the first time, this would put an official – and explosive – figure on just how much money the Bank’s emergency policy has cost millions of Britons.
Last night Dr Ros Altmann, director general of Saga, the old age specialists, said: ‘There is precious little evidence that QE is actually working to boost the economy. But there is plenty of evidence that it is having a dreadful impact on pensions and pension funds.
Damning: The Treasury select committee report describes QE and the Bank of England’s decision to cut the base rate to 0.5 per cent as ‘extremely lax monetary policy’
‘It is causing suffering to savers and pensioners who were in no way responsible for the problem of over-indebtedness and irresponsible lending and borrowing that caused the mess in the first place.’
The QE programme – which has been likened to printing money – started under Labour in 2009 and has continued under the Coalition.
Today’s report highlights how it has had the effect of slashing annuity rates, or ‘incomes for life’.
When a pensioner cashes in his savings for retirement, he is paid an annuity for the rest of his life. In 1990, the average annuity rate for a 65-year-old man was an annual return of 16 per cent of his pension pot.
Today it is just six per cent.
Thus a man who cashed in a £100,000 pension pot in 1990 would have got an annual income of £16,000.
‘A mess’: Saga director general Dr Ros Altmann says there is ‘precious little evidence that QE is actually working’
A person retiring today, who had diligently saved the same amount, would get just £6,000 a year, an annual cut of £10,000.
Record numbers of people are currently turning 65. Around 806,000 people will reach the landmark birthday this year.
Annuity rates are calculated on a complex formula which are linked largely to ‘gilts’, the Government bonds the Bank has been buying through its policy of QE, driving up prices.
A gilt pays a fixed income throughout its life. When the price of the gilt rises, it costs more to buy the same income.
As insurance companies depend on gilts to pay annuities to pensioners, it is costing them more, so they are giving less money to pensioners through lower annuity rates.
The annuity is a one-off purchase which cannot be reversed, which means pensioners are locked in at the dire rates until they die.
The National Association of Pension Funds has warned that QE has left people retiring around now ‘out of pocket for the rest of their lives’.
The Treasury committee calls on the Bank, particularly the nine men on its interest-rate setting committee, to ‘improve upon their efforts’ to explain their controversial policy to the country.
Savers have been paid paltry interest on their nest-eggs, with many accounts paying close to zero, amid fears that the rate will remain at rock bottom for two more years.
It says: ‘The policy of extremely lax monetary policy has not been without criticism. Under this policy, savers receive a far lower return on their savings than under more normal conditions.’
The report quotes the Bank’s deputy governor Paul Tucker as saying he has ‘great sympathy’ for savers, but insisting the economy would have been ‘destroyed’ without the Bank’s action.
Simon Rose from the campaign group Save our Savers said: ‘The Bank seems to have no idea of what their policies actually do, particularly at the poorer end of the society.’
The Bank declined to comment.
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In 1990, the average life expectancy of a male was 72.7 years. It is now 78.4. Assuming a retirement age of 65, a pension pot had to provide for an average of 7.7 years of retirement. Now it is 13.4 – almost double. That is the major factor in the reduced annuity rates and not QE, although ithe latter has had some effect. Yet people still expect to put aside 5% of their earnings for 45 years and receive a pension of 60% of their FINAL earnings for 15 years. Do the maths, the sums just don’t work out. (Expecting red arrows.)
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Save our pensioners! Now thats a laugh coming from a government that steals money that people have saved up for their retirement. Perhaps they could start by stop discriminating against those who have chosen to retire outside the EU and restore the increases in these peoples paid for pensions, those who have worked all their working lives, paid tax and insurance.
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“I have a company pension which I cashed in last year on reaching 65. It pays me just £832 a year. I also have a forces pension which has gone down by over £1000 a year since I started to receive the state pension. Give with one hand and take away with the other.
– Owd Tyke, Devon, 17/4/2012 23:29″===========You must have other income because the figures you quote are below the tax allowance for people over the age of 65.
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QE = redistribution of wealth from those that dont have it to those that have it in abundance. The whole thing was a con.
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Now this may seem a bit circular but I’ve been in finance since the good old days but stay with me here…I understand that you did not plan to earn 2% on that little nest egg you’ve built up but you did not complain during the accumulation phase, I.e. that bull market where you had all your money in equities and they went through the roof solely because of a QE kind of free money under Geeenspan and Brown…had it not been for monetary manipulation you’d be earning twice the interest rate on a pot half the size! Also he who blames government, trusts government…pity the fool!
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This is absolutely correct. Through no fault of my own, I’m too sick to work.
As it happens I have substantial savings.
Thanks to Duncan Smith, the state has thrown me to the lions in spite of decades of national insurance contributions and substantial income tax with no avoidance of any kind.
Thanks to the BoE, my wealth is ‘growing’ at around 3% per annum at best and under 1% at worst (everyone needs some ‘ready cash’ and that’s the best rate on offer) whilst Osborne’s policies have meant higher VAT on day-to-day living and massively inflating costs: notionally 3.5% but really more like 15% for food etc..
I’m losing probably 5-8% a year on the overall amount I have to stay alive with. When it runs out, I’ll be sent cap-in-hand to the state, having had a fortune confiscated, only to be labelled a scrounger and malingerer.
It’s the ordinary working people who’ve been most sane with their money who are being hammered every time whilst subsidising the reckless.
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I nominate Guy Fawkes to return in the Tardis.
All in favour shout eye!
PS Please can we have an English spell-checker?
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This article is nonsense. It is apparent that pensioners and Saga think that they are a special case and do not think they should be suffering from the economic downturn like everyone else. One of the main culprits in all of this is the media who continue to be completely irresponsible and untruthful in their articles. One thing is for sure and that is that amongst ordinary people it is pensioners that are most to blame because they have had democratic power the longest and have used it badly. In particular all those voting Labour and who supported the last Government. The high public borrowing which we couldn’t afford started with them and they left us an economic nightmare. Remember older people have benefitted from high house prices. The annuity example is misleading because the main reason rates have gone down is due to people living longer not QE. As for interest rates these are low because of the low risk, you can get returns of 8% and 9% if you invest in shares.
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“….people retiring between 6.4.2013 and 6.4.2016 were also promptly kicked in the teeth by Spiv Osborne who took away their extra tax allowance, and excluded them from the proposed flat rate pension”. Sdemnips, Birmingham, 17/4/2012 23:08******* ****Completely untrue. The pension remains for all who have paid NI and if not benefits will pay the same or more. All pensioners have had future increases in tax allowance stopped . The reason for an increased tax allowance was that if inflation was say 4% and pension rise tied to inflation would be 4%, the rise attracted tax, so the pension decreased in value each year. To compensate for this, the tax allowance for pensioners was increased each year by a marginal sum.
This is to be stopped altogether for all pensioners, who will then have the same allowances as everyone else.
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The whole thing is a disaster of epic proportions – we seem to be heading back to the great 1930s Depression. The HUGE mistakes of the budget, the divisions inside the Coalition with no real focus on exactly how the country is going to get out of the mess Labour created. It seems incredible that two years after we kicked them out, things seem far far worse with no end in sight. For the Tories this is a disaster at the forthcoming council elections will show. Frankly Cameron should ditch the Lib-Dems and govern as a minority party until forced to call a General Election. The Lib Dems – whose political shenanigans have been disgraceful – would go into melt down. Ditch the boy Osborne and bring back a Tory grandee as Chancellor – someone with wisdom and experience. Finally – get us the hell out of the EU. Offer the public a referendum with a definite promise that the Tories will support leaving and let us get this terrible period in British history over, done with, and behind us.
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