The plan to buy up £75bn worth of gilts has increased the price of the remaining gilts, driving down their yield and pushing up companies’ pension liabilities.
Hargreaves Lansdown head of pensions research Tom McPhail says: “Gilt yields have fallen off a cliff and final-salary pension deficits have risen by up to £100bn. This is really bad news for pension schemes.”
Standard Life head of pensions policy John Lawson believes that the Pension Protection Fund may be forced to raise its levy.
He says: “The levy is estimated at £700m for 2009/10 but the PPF could increase it if deficits are bigger than previously envisaged, especially as the number of schemes ending up in the PPF is increasing.”