Interest Rate Change Shaves £72B From Pension Deficits

By Martin Croucher (January 10, 2022, 11:34 AM GMT) -- Pension schemes in Britain were £72 billion ($98 billion) better off in December because of the knock-on effect of the central bank's decision to raise interest rates, a retirement consultancy said on Monday.

XPS Pensions Group said that the Bank of England's move to raise the base rate from 0.1% to 0.25% had reduced the aggregate deficit of defined benefit schemes from £381 billion to £309 billion by the end of the month. The BoE announced the rise on Dec. 16.

The cut in the deficit was largely due to the increase in yields from sterling-linked government bonds, known as gilts....

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