Simon English: Sorry Saga people, you're not only ones suffering


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The Independent Online

Outlook Note to old people moaning about the effect quantitative easing has had on their pensions: put a sock in it.

The complaint from the over-50s group Saga is that the £375bn money printing programme devastates pensions by forcing down yields and shoving up inflation.

Well, forcing down yields is exactly what QE is supposed to do, but it doesn't follow that pensions are ruined, or at least in any worse shape than they already would have been. The other effect of QE, indeed the main point of it, is to make other assets such as equities more attractive, sending them up in the process.

For most people, even those on the verge of retirement, that's good news because their pensions hold shares that are rising.

The Saga louts might say that this asset boost hasn't happened, but we don't know what the state of play would be if the Bank hadn't done any QE. Quite likely the stock market would be much lower than it is and so would the value of the pension funds. Complaints about inflation from a generation that has seen such massive gains from house prices that by many measures seem absurdly inflated are sort of funny.

All they are really saying is that they like inflation when it is good for them and don't like it when it isn't. That's perfectly understandable, but it is not a position of moral superiority. We all wish we were richer, but that we are not may not be other people's fault. If your pension is too small to match your needs and desires, well, maybe you should have paid more in to it (Saga don't like the sound of this very much).

Someone who has worked for 40 years on the expectation of a certain level of retirement income must be annoyed to see that it is lower than they hoped.

On the other hand, people don't stop being part of society when they retire. We are in this together.

That efforts to save the nations economy have proved a little inconvenient for pensioners is irksome (we do apologise), but they are hardly the only group feeling the pinch.

The list of people annoyed about QE seems to grow each day, but all of the complaints assume there was a better way to prevent meltdown, and it is not obvious what that way would be.

Ouija boards, perhaps. Magic beans? You could just give everyone £5,000 in the hope that they'd use it to boost the economy, but you'd hardly be likely to see that money again.

QE is, or should be, reversible. At some point, once we are through what everyone keeps calling a crisis, the Bank will sell gilts rather than buy them – you never know, they might even make a few quid in the process. From their Marbella holiday homes, sipping banana daiquiris bought with their winter fuel allowance, the Saga crew might find cause to complain about that too.