DB pension scheme deficits 'may be affected by further QE'

The deficits faced by the country's defined benefit (DB) pension schemes could be negatively affected if the Bank of England goes ahead with further quantitative easing (QE), one organisation believes.

Aon Consulting has highlighted the uncertainty that currently exists in relation to the Bank's future QE plans.

Government bonds are impacted by QE, according to the firm's Head of Corporate Solutions, Marcus Hurd.

"Quantitative easing tends to increase the price of government bonds and so reduce their yield. This, in turn, forces up pension scheme liabilities and increases deficits," he stated.

Mr Hurd's organisation has also revealed that last month saw the overall deficit faced by the DB schemes covered in its Aon200 tracker drop to a level of £94 billion.

Meanwhile, Aon Consulting has also recently highlighted that between September of last year and January 2010, a 22% rise was seen in the number of workers opting for retirement in the UK.

Posted by David Shuker.