Pensioners have exaggerated how much money they are losing because of quantitative easing (QE), according to Sir Mervyn King, the Governor of the Bank of England.Britain's top economist said the Bank's monetary easing programme is not as bad for the value of pensions as has been claimed.
In a hearing at the House of Lords on Tuesday, he admitted he could not rule out an extension of QE, which was increased by £50bn in February to a total of £325bn.
Sir Mervyn said the falling value of pensions was not the fault of the extra stimulus. "I'm concerned about what has happened to the pensions industry and defined benefit pensions but I think they reflect a wider set of issues. The decline cannot be laid at the door of our programme. (AtW's comment: extra "stimulus" generates higher inflation where as low rates reduced saving returns to 0 - both of which are his responsibility)
"It might not have had quite such as big an effect as some people think."
Sir Mervyn also risked raising tempers in the City by moralising over the fact many bankers are motivated purely by money. "One of the most depressing things about some parts of the financial sector is that people seem to think their main objective of being in it is to earn enough money in order to leave it – as opposed to finding satisfaction and a life-long career within it," he said.
Despite his downbeat assessment of the City's ethics, Sir Mervyn said he was optimistic the UK could return to growth rates seen before the financial crisis, although he believes it will take "some time" to more normal levels.
In the eurozone, he said the loss of productivity and large deficits in some southern states meant there would be "no quick resolution" to the crisis.
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From related article:
"In his (Sir Merv's) final 16 months as a member of the generous final-salary scheme, the Governor's pension pot grew by a third from £3.95m to £5.36m."
Source: Bank of England boosts Mervyn King's pension by £1.4m - Telegraph
In a hearing at the House of Lords on Tuesday, he admitted he could not rule out an extension of QE, which was increased by £50bn in February to a total of £325bn.
Sir Mervyn said the falling value of pensions was not the fault of the extra stimulus. "I'm concerned about what has happened to the pensions industry and defined benefit pensions but I think they reflect a wider set of issues. The decline cannot be laid at the door of our programme. (AtW's comment: extra "stimulus" generates higher inflation where as low rates reduced saving returns to 0 - both of which are his responsibility)
"It might not have had quite such as big an effect as some people think."
Sir Mervyn also risked raising tempers in the City by moralising over the fact many bankers are motivated purely by money. "One of the most depressing things about some parts of the financial sector is that people seem to think their main objective of being in it is to earn enough money in order to leave it – as opposed to finding satisfaction and a life-long career within it," he said.
Despite his downbeat assessment of the City's ethics, Sir Mervyn said he was optimistic the UK could return to growth rates seen before the financial crisis, although he believes it will take "some time" to more normal levels.
In the eurozone, he said the loss of productivity and large deficits in some southern states meant there would be "no quick resolution" to the crisis.
--
From related article:
"In his (Sir Merv's) final 16 months as a member of the generous final-salary scheme, the Governor's pension pot grew by a third from £3.95m to £5.36m."
Source: Bank of England boosts Mervyn King's pension by £1.4m - Telegraph
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