Pension funds are bracing themselves for the Bank of England to pull the plug today on a £65billion bailout designed to protect them from bond market chaos.
The Bank stepped in with the emergency help two weeks ago after a sell-off in government bonds, known as gilts, left the retirement schemes scrambling for cash.
It said it would buy £5billion in bonds a day – since beefed up to £10billion.
The intervention is due to end today, but some funds have been asking for more time to sort out their finances.
One market-watcher said it was a ‘tall order’ to have done so by now. The latest Bank auction yesterday saw it buy £4.7billion worth of bonds – the biggest daily sum so far – taking the total to £17.8billion.
The Bank stepped in with the emergency help two weeks ago after a sell-off in government bonds, known as gilts, left retirement schemes on the brink of collapse
The Bank took action after Chancellor Kwasi Kwarteng (pictured) set out his mini budget plans last month
The Bank launched the intervention on September 28 following market chaos after Kwasi Kwarteng’s mini-Budget.
Earlier this week, governor Andrew Bailey squashed speculation that the scheme would be extended, telling funds: ‘You’ve got three days left now. You’ve got to get this done.’
Craig Inches, head of rates at Royal London Asset Management, said Mr Bailey had effectively given them a ‘Mission Impossible’ to get their house in order ‘before this intervention self-destructs’.
That seemed to ‘wake up’ funds, he said, but the Bank could still intervene if more market chaos emerges.
Bonds staged a recovery yesterday, but Sandra Holdsworth, of Aegon Asset Management, said: ‘There’s a huge amount of nervousness for next week.’
Retirement schemes faced having to raise around £320billion; Miss Holdsworth said: ‘Probably the sheer scale of it will take time to work through.’