The effects of quantitative easing (QE) has left DB schemes fighting a £90bn pension bill and has “eroded the culture of saving”, MPs were told today.

Speaking to the Treasury Select Committee today as part of the government enquiry into quantitative easing, NAPF chairman Mark Hyde Harrison said that “£9bn a year over the next ten years would have to be paid” to fund this deficit gap.

Up until now around £375bn has been injected into the economy which is perceived to have inflated scheme liability values, and has resulted in companies attempting to increase contributions to plug deficits.

In written evidence, Saga director general Ros Altmann stated that “QE has already made many pensioners permanently poorer, as they cannot undo the impact of low annuity rates in future”.

She added that “much of the Bank’s justification for QE rests on the assertion that without QE and 0.5 per cent bank rate, the economy and employment would have been far worse” and that the claim “is impossible to prove and the Bank has not evaluated alternative policy options other than gilt-buying”.

On the issue of smoothing, Retirement Policy Council chairman Ruston Smith said the impact of this could prove to be “detrimental” because there is likely to be a drag if interest rates rise.

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