Lord Myners – 2016 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Lord Myners on 2016-07-13.

To ask Her Majesty’s Government whether they have made an estimate of the cost of their monetary policy on the solvency of pension schemes, and whether they plan to use the profit made from quantitative easing to strengthen the financial position of the Pension Protection Fund.

Lord Freud

The UK’s monetary policy framework gives operational responsibility for monetary policy to the independent Monetary Policy Committee (MPC) at the Bank of England. Decisions on setting monetary policy are for the judgement of the Monetary Policy Committee.

The Government is sensitive to the fact that there will be those who gain and those who lose from any particular monetary policy decision. Such distributional effects typically balance out over the course of a policy cycle.

Over the last six years low interest rates have helped households and businesses through challenging economic times. Furthermore, as the Bank of England has explained in its article entitled "The distributional effects of asset purchases" published in its 2012 Q3 Quarterly Bulletin: "Without the Bank’s asset purchases, most people in the United Kingdom would have been worse off. Economic growth would have been lower. Unemployment would have been higher. Many more companies would have gone out of business. This would have had a significant detrimental impact on savers and pensioners along with every other group in our society."

The Pension Protection Fund is financially sustainable and there are no plans to further strengthen it. The PPF 2015/16 annual report said that the Fund has over £22 £23 billion assets under management and is 115 116.3 per cent funded.

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