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Printing cash widens gap

The pension deficit of UK companies has soared by £100bn to a record £390bn due to the Bank of England’s quantitative easing programme, according to Hargreaves Lansdown.

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.”


Tory review floats idea of disbanding the FSA

The FSA may need to be replaced by two separate bodies responsible for micro-prudential issues and conduct of business, with the Bank of England to take on macro-prudential issues, according to Sir James Sassoon.

Means to a blend

Blending managers in a multi-manager structure is the task of optimally combining managers that offer complementary characteristics and should enhance performance potential within a more efficient risk framework. It is as important as choosing the managers in the first place.


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