Why is the Bank of England buying gilts?

In a dramatic about-turn, the Bank of England is now intervening in the gilts market to try and calm the reaction to Friday’s fiscal event. It will buy long-dated government gilts for the next two weeks, which will lower the cost of government borrowing. It is also postponing quantitative tightening (i.e. selling the securities it bought during QE). My understanding is that the Bank’s intervention was to prevent the pension market from imploding. The rise in gilt rates meant that traditional pension funds were becoming forced sellers to meet collateral demands from banks. This risked a doom loop. The Bank’s actions have stopped the bleeding but there will likely be

The Tories are picking inflation winners and losers

Inflation rose to 9.1 per cent on the year in May, taking the UK’s consumer price index to a 40-year-high. Optimists are noting the slowdown in pace, rising by 0.1 per cent between April and May. But I suspect we are in the eye of the storm. This price spiral is nowhere close to over, not least because the next energy price cap review is currently estimated to lift bills by an additional £1,000. The Bank of England’s latest forecast predicts inflation will peak at around 11 per cent, but it must be said that the Bank has consistently underestimated the inflation rate, playing catch-up with its forecasts, as well

Fact check: are the SNP’s pensions claims right?

Ian Blackford has been making the most of current Tory difficulties, railing against the corrosion of public trust on Monday caused by partygate. But is the SNP Westminster leader really best placed to talk? Mr S has already pointed out his party’s own lamentable record on inquiries and civil servants up at Holyrood. And now it seems the nationalists are happy to indulge in outright lies as to the future of Scottish pensioners in a post-Scexit nation. For speaking to the Scotland’s Choice podcast in December, Blackford was asked what would happen to Scotland’s state pension if the country voted for independence. He replied: Absolutely nothing. The important point is that those who

Time to ditch the pension triple-lock for good

Perhaps it’s finally dawned on the government that they have an intergenerational inequality problem on their hands. The decision to suspend the pension triple-lock for one year to avoid an 8 per cent increase to the state pension would suggest so. Asset wealth is already excessively concentrated in the over-55s. To even this spendthrift government, a massive bump in pensions while the rest of the economy languishes is a step too far. But that’s exactly what happens every year anyway under the triple-lock. The policy means that even when the rest of the economy stagnates, pensioners receive a boost. It is a feature of the system, not a bug, which came into place

Rishi Sunak should blame Brexit for ditching the pensions triple lock

Car workers in Sunderland are doing just fine. Construction workers still have jobs. And the food is still getting to the supermarkets, even if there are some occasional disruptions to supply.  Not many of the dire warnings about the consequences of leaving the European Union have actually come to pass. There is, however, one group that looks likely to be hit, even if no one quite predicted it. The pensioners. It looks certain to cost them the ‘triple lock’ on their pensions: although since many of them voted for Brexit, they can hardly complain. The government is tying itself up in knots on how to wriggle out of the ‘triple lock’

Boris must face the truth about the ‘triple lock’ pensions promise

The Tories have a pension problem – and it’s not strictly financial. Over the coming weeks, the cost of pension promises is likely to be in the spotlight. The pensions ‘triple lock’, which the Prime Minister reportedly refuses to scrap, means that the state pension is upgraded each year in line with average earnings, the Consumer Price Index or by 2.5 per cent – whichever is higher. This year, it’s likely that earnings will be the highest of these figures by a long way. Here we encounter a problem: the triple lock was not designed with a pandemic in mind. The crazy world of ‘Coronomics‘ has led to the biggest

The Co-op Bank isn’t worthy of its name

We’ve heard a lot this week about infrastructure spending, and how much more will be needed if the UK is to achieve the ‘Green Industrial Revolution’ that the Prime Minister seems to have sketched on the back of a pizza box. We’ve also heard that the Chancellor is looking at ways to squeeze billions for Treasury coffers out of the private pension sector. What we haven’t heard so far is a plan to join those two pieces of the economic jigsaw — by encouraging pension managers to become committed investors in infrastructure projects. There are signs of a small shift in that direction among local authority pension funds, but at

Letters: Governments should be promoting marriage, not discouraging it for the sake of equality

Look closer to home Sir: In your interview with Boris Johnson (‘Austerity was not the way forward’, 30 November) he attributes the EU referendum result to ‘regional inequality… parts of the UK were simply being ignored… leaving people behind’. Yet he says his remedy for this is ‘infrastructure and education and technology’. In other words, people voted Leave for reasons that had nothing to do with the EU: they were ‘left behind’ because of the austerity policies of the British government. The remedy he identifies is also entirely within the power of our own government. David Woodhead Leatherhead, Surrey Brexit without sovereignty Sir: Your leading article ‘Out and into the world’

Lionel Shriver

We don’t owe Waspi women tea and biscuits

The pressure group Women Against State Pension Inequality (Waspi) is oddly named. What their campaign opposes is pension equality. Now, technically these activists born in the 1950s do not object to equalising the pension ages of men and women, so long as said activists don’t personally have to sacrifice for gender justice. Supposedly, the problem is insufficient notice. Yet the UK bill to shift women’s state pension age from 60 to 65 was passed in 1995. That seems like pretty advance notice to me. Besides, government is not obliged to insure us against our expectations. The UK capriciously changes its tax policy every six months, and ‘but I didn’t expect

All belief systems must accept the danger of ridicule and contempt

In the ‘whataboutery’ which now dominates British politics, no mention of Labour anti-Semitism is complete without a counter-accusation of Tory Islamophobia. It swiftly followed the Chief Rabbi’s condemnation of Labour anti-Semitism on Tuesday. There may well be people in the Conservative party who have an irrational hatred of Muslims, but the term ‘Islamophobia’ should be absolutely resisted. Unlike anti-Semitism, this is a concocted concept. A strand of Muslim thought sees all criticism of the prophet Mohammed and his faith as blasphemy and labours worldwide to ban it. Such Muslims are driven mad by the way Jews can cry ‘racism’ when they are attacked, whereas they cannot. But in fact this

Amber Rudd admits Universal Credit is in trouble

Amber Rudd left the Home Office over the Windrush scandal and has joined the Work and Pensions department just as its flagship benefits reform is under fire from all angles. The new Secretary of State spent most of her first session at the dispatch box this afternoon answering questions on Universal Credit – and she had arrived determined to strike a rather different tone from her predecessor. Esther McVey, who resigned from the role last week, had garnered a reputation for being rather hardline when dealing with criticisms of the benefit roll-out, while also managing to give far more away about some of its problems than Number 10 would have

Barometer | 22 March 2018

Spin doctors The BBC has denied it photoshopped a Newsnight backdrop to make Jeremy Corbyn’s hat look more Russian. The art of doctoring photos is, appropriately enough, often credited to the Bolsheviks. One photo of Lenin in 1920 had Trotsky and Kamenev edited out after they fell from favour. — Yet manipulating photos for political purposes really began 50 years earlier. One photo, an attempt to flatter Abraham Lincoln, had his head fixed on the body of a more shapely politician, John Colhoun. — A photo of Ulysses S. Grant inspecting his troops on horseback has been exposed as being made of three different images. Course work Graduate salary data

ISA limits discourage ordinary people from saving

The maximum amount you can save in an ISA for the tax year 2017-2018 is now £20,000. The maximum annual pension contribution is £40,000. Counterintuitively, these huge allowances are actually a disincentive for ordinary people to save. With a £5,000 ISA maximum, a modest saver had an impetus to save each year for fear of missing out; with an ISA ceiling of £20,000, anyone can postpone saving until next year. But you don’t have to be a Marxist to wonder why a household which can save £60,000-120,000 a year is in need of extra help from the state. Figures released this year by HM Revenue & Customs forecast that tax

Letters | 11 January 2018

Long lives and pension pots Sir: Jon Moynihan is too optimistic about the prospects for further increasing life expectancy, and too gloomy about those of the pensions industry (‘Falling Short’, 6 January). The wondrous advancements of medical science have offered little to solve the most pervasive problem we now face: declining mental health. It seems unlikely that society will chose to invest endlessly in repairing bodies to extend lifespans, when the minds relating to those bodies have already been lost. So the viability of pension providers is not as parlous as suggested. Indeed, many current fund deficits derive from the low investment yield environment that central bankers have engineered but which

Falling short | 4 January 2018

Hedge funds have already spotted it: Jim Mellon’s latest book, Juvenescence, reviews the new science that will lengthen our lives by 20 years. Through regeneration (stem cell) and repair (DNA) technologies, we’ll soon be living healthily and happily to 110 or more. How soon? Who knows. But the repercussions will be enormous. Major insurance companies will go bust; speculators will make a fortune shorting them; 90-year-olds who bought annuities will become destitute when their annuity provider fails; there will have to be a total rethink of the nation’s state pension age. The annuity recipients; those without savings; company pension funds (many of which are already in negative cash flow): all

Make life easier and all else will follow

You can try to change people’s minds, but this is difficult. You can bribe people to change their behaviour, but it’s expensive. Far simpler is to make the new behaviour easy and enjoyable in and of itself. Recently, colleagues of mine were asked how to promote the habit of recycling domestic refuse. They explained there was no need to mention the environmental benefits at all. ‘Just make sure everyone has two pedal bins, not one.’ Regardless of people’s attitudes to the environment, what really matters, as Martin Luther King might have said, is not the colour of their politics but the contents of their kitchen. To encourage pension saving, the

Why do nurses quit? Because they care

Sometimes, on Sundays, I visit Richard, a friend who’s 95 and lives alone. The idea originally was that I’d be doing Richard a favour, but the truth is he cheers me up far more than I do him. I visit because I like him, but as the weeks go by, I’m afraid I’ve also developed a grim curiosity about what it’s like to be in your nineties. Meals-on-wheels, crumbling knees, hernias, cannulas, the way a day dissolves into unintended naps… ‘Can’t we talk about something more cheerful?’ says Richard, as we sit knee to knee. But I’m obsessed, like a tourist taking notes on some awful country they must one

What we learned from the Pensions Green Paper

You’ve saved for years into a defined benefit pension scheme in the expectation it will provide you with a secure and comfortable retirement. Then, without warning and through no fault of your own, the company supporting the scheme goes bust, plunging you into uncertainty. That’s the worry faced by members of many of today’s nearly 6,000 private sector defined benefit schemes. After a number of high profile cases and much recent focus in Westminster, last week’s pensions Green Paper was expected to propose real solutions for these schemes which pledge to pay out an income based on how much you earn when you retire. But what did it actually say? Firstly

Barometer | 23 February 2017

Big league Lincoln City became the first non-league club since Queens Park Rangers in 1914 to win a place in the FA Cup quarter-finals. But what happened in 1914? — There were only 40 league clubs and QPR won a bye through the early rounds. — They drew 2-2 with Bristol City before winning 2-0 in a replay. — They beat Swansea and Birmingham (2-1 each) to reach the quarter-finals, where Liverpool beat them 2-1. — Liverpool lost the final 1-0 to Burnley, the team Lincoln beat last weekend. — That final was the last held at the Crystal Palace, which had been its venue since 1895. Mega mergers Unilever

Why lining shareholders’ pockets is more productive than plugging black holes

The revelation by actuarial consultants Lane Clark & Peacock that 56 of the supposedly blue chip companies in the FTSE 100 index are running deficits totalling £46 billion in their defined benefit pension schemes puts the BHS story into a new perspective. It tells us that the £571 million ‘black hole’ in the chain’s pension fund was by no means out of the ordinary — it is a small fraction of the deficits declared by the likes of BT, Tesco, BAE Systems and BP, even if it might have been mitigated by wiser decisions on the part of the scheme’s trustees and greater generosity on the part of former BHS owner