Pension chiefs have warned the Bank of England it risks creating further market chaos by ending its bond-buying support later this week after officials were forced into another intervention.

The industry urged Governor Andrew Bailey to extend the Bank's bond purchases to at least the Chancellor's fiscal statement on October 31 amid growing fears of more market chaos when the support wraps up on Friday.

The Pensions and Lifetime Savings Association (PLSA) said further action would be needed to avert a crisis for retirement savings.

The Telegraph says the warning came as Threadneedle Street made its third emergency bond market intervention in two weeks, widening its daily purchases to include index-linked gilts.

But the Bank's latest efforts to calm bond markets failed to prevent another sell-off in UK debt as uncertainty over the extent of support lingers.

Yields on 30-year gilts rose for their seventh consecutive day on Tuesday to hit 4.79% - marking the longest streak of increases since August. Bond yields rise when prices fall.

Rise in yields

The continued rise in yields came despite the Bank of England announcing it would buy up to £5billion of inflation-linked gilts on top of the £5billion of its regular long-end bond purchases.

The Bank said it stepped in again to stop bond market chaos posing a "material risk" to financial stability. Officials said there was a threat of a "fire sale" of assets by pension funds as they rushed to rebalance their portfolios in response to wild price swings.

Threadneedle Street snapped up nearly £2billion of inflation-linked gilts on Tuesday after adding them to its emergency bond-buying programme.

However, the purchases failed to stop yields on inflation-linked bonds rising. The yield on a 30-year "linker" rate was up for the third day in a row. Yields on government bonds are now nearing the levels they were at last week before the Bank stepped in to calm the markets.

The Telegraph reports that officials from the Bank have said they are not aiming to control yields, but simply restore the orderly functioning of markets.

The PLSA said "key concern" of pension funds had been that the period of purchasing should not be ended too soon.

Retirement income

The association represents pension schemes that together provide retirement income to more than 30million UK savers.

Turmoil in the bond market following the mini-budget left some pension funds close to collapse.

The PLSA said that members of defined-benefit pension schemes, such as final-salary pensions, should be reassured that their pension benefits were safe and scheme funding was strong, despite "operational challenges".

FTSE 100

The UK's top share index, the FTSE 100, was up 14 points at 6,899 shortly after opening this morning, following yesterday's 74-point loss.

Brent crude futures were 0.68% higher at $94.93 a barrel.

Companies reporting today

  • Q3 results: PepsiCo Inc
  • Trading update: Barratt Developments, QinetiQ Group

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