Nearly 100,000 Standard Life investors have been told that a cash fund which many regarded as an ultra-safe alternative to the stockmarket was in reality invested in toxic mortgage debt that has plummeted in value, according to The Guardian .
The news will dismay many investors who thought they were protected from stockmarket falls. Many were close to retirement and had parked their pension savings into the cash fund before turning it into an annuity.
Savers at other pension companies will also be shocked to discover that what they thought were deposit-style funds have fallen in value. Worst hit is Threadneedle's £450m money market fund, which has fallen 16.6% over the past year.
THE BANK OF ENGLAND will embark on unprecedented new measures to pump cash directly into the economy in "a matter of weeks", Mervyn King has pledged, reports The Telegraph.
In a speech in Nottingham last night, the Bank's Governor said he and the Monetary Policy Committee would soon start buying up assets from private investors in their latest bid to prevent the economy sliding into a long-lasting depression.
The move will mark the effective passing of traditional monetary policy in the UK.
Mr King acknowledged that interest rates, which have already been reduced from 5.5pc to 1.5pc - were losing their power.
He said: "With Bank Rate already at its lowest level in the Bank's history, it is sensible for the MPC to prepare for the possibility - and I stress that we are not there yet - that it may need to move beyond the conventional instrument of Bank Rate and consider a range of unconventional measures."
STERLING CONTINUED ITS SLUMP this morning, dropping a further 1.1 per cent against the dollar, on mounting concern that the Government will be forced to nationalised at least another UK bank, putting further pressure on the public purse, reports The Times.
The pound declined by $0.016 to $1.3793 today, beginning its fall to a seven-year low on Monday when the British Government announced a second package of measures to bailout the banking sector.
On Monday and Tuesday alone, sterling lost 6.1 per cent.
Fears are growing that the bailout could force public borrowing to exceed the £118 billion target, equal to 8 per cent of national income, in the next financial year which was announced by Alistair Darling in his Pre-Budget Report last November.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
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