It has emerged that employees, led by the Bank’s governor, Mark Carney, received the equivalent of a 50%-plus salary contribution into their pensions last year, underwritten by the taxpayer. Most private employers pay 5-10% of salary into pensions, with many large companies struggling to cope with widening deficits in their schemes.
Lady Altmann, who was pensions minister under David Cameron, blamed the Bank’s quantitative easing programme (QE) for creating ever-larger deficits, while itself being insulated from the problems caused by its policies.
“The private sector cannot just keep on putting more and more money into the seemingly bottomless pension pit,” said Altmann, accusing the Bank of complacency. “The Bank has been insulated from the problems caused by QE because its own pension scheme is funded by taxpayers.”
QE, where the Bank of England creates money to buy government #bonds, has the effect of pushing down the interest rate, or yield on government bonds. It means lower mortgage rates, and lower #interest rates on bank deposits. But it also spells hardship for final-salary-based pension funds, as lower interest rates mean investments will not grow as much to meet the bill for paying future pensioners. So employers have to pay more in now to fill the gap.
The former Conservative pensions minister, Ros Altmann, has launched an extraordinary attack on the Bank of England for making pensions ruinously expensive for employers while enjoying lavish subsidies from the taxpayer for its own pension scheme.