UK - A deputy governor of the Bank of England has dismissed claims that its quantitative easing (QE) programme has significantly increased UK pension fund deficits in a rebuke to calculations by the National Association of Pension Funds (NAPF).

Speaking at the NAPF's local authority conference earlier this week, deputy governor for monetary policy Charlie Bean said the central bank's estimates suggested the development of underfunding in schemes would have been "broadly similar", even without its asset repurchase facility introducing £325bn (€404bn) into the UK economy.

The claim contradicts the pension association's own estimates, calculating a rise in deficits of £90bn through the most recent £50bn tranche of stimulus, as well as a further £180bn increase by previously QE measures.

Addressing delegates at the seminar, Bean said he interpreted the BoE's research to mean that while the changes in deficit were "certainly not trivial" for schemes that were "substantially" underfunded, the impact of the stimulus was nonetheless small.

He said problems with underfunding also stemmed from the collapse in equity prices as a result of the financial crisis.

"It would be an error to attribute the deterioration in pension deficits since the start of the crisis solely to the impact of QE," he said.

"The second observation is that QE does not inherently raise pension deficits. It all depends on the initial position of the fund.

"If a fund starts off relatively 'asset poor', the sponsors will now find it more costly to acquire the assets necessary to match its future obligations."

His statement echoes comments by governor Sir Mervyn King at an economic affairs committee hearing earlier in the year.

At the time, King said funds with matching assets - a "sensible way" for a pension fund to invest, according to him - would not have been affected by the bank's actions.

The BoE's own pension fund is heavily invested in liability-matching assets, with a £2bn holding in index-linked gilts and a further £415m of its total £2.5bn in assets in both non-inflation linked and corporate papers.

Bean also told NAPF delegates it made "little sense" to attempt to fund what he called a "temporary" deficit, saying that corrective action was only required if the underfunding position was likely to persist.

"It may be tempting to conclude that the current abnormally low yields are primarily a consequence of QE, and that the right approach is just to look through the associated rise in deficits," he said, "[but] pension funds and their sponsors may […] have to contend with low yields for some considerable time yet."

Meanwhile, the National Union of Journalists (NUJ) has welcomed a high court ruling throwing into doubt the BBC's attempt to rein in a deficit in its existing defined benefit scheme by capping increases to pensionable pay at 1% per annum.

The case - brought by a member of the national broadcaster's philharmonic orchestra - was heard by the court earlier this year. The NUJ argued the BBC's measures were meant to "push" staff into switching to the corporation's other pension plan.

In his ruling, Mr Justice Warren said the BBC's position was "not correct" and that he did not accept the broadcaster had the "wide discretion" to impose a cap on pensionable pay.

Union general secretary Michelle Stainstreet said the judgement proved there was a "fundamental flaw" in the BBC's actions.

"The BBC rode roughshod over the rules of the pension scheme in a deeply cynical manner," she said.

"The pensions trustees should never have allowed this to happen without the express agreement of members of the pension schemes."

Lastly, the Pensions Regulator has outlined its corporate plan for the next three years, with chairman Michael O'Higgins stressing that its focus would remain on "proportionate" regulation.

The regulator also said it would be working with both the industry and government to "ensure the UK position is recognised in Europe", with the "right outcome" achieved for the country's industry - likely a reference to ever-growing opposition within the government and the pensions industry to proposed changes to the IORP Directive that could see the introduction of solvency standards akin to those in the Solvency II insurance directive.

Chief executive Bill Galvin added: "In DB regulation, we'll be focusing our attention on effective risk management across schemes and sponsors, particularly in more challenging segments of the industry."

The regulator last month outlined how it expected DB schemes to respond to growing deficits in light of market uncertainty, saying it would grant some flexibility when examining funding proposals.

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