UK – The impact of quantitative easing (QE) on UK Gilt yields has been "exaggerated", consultancy Towers Watson has claimed, arguing that the decline in yields was only "marginally more" than what that would have occurred without the Bank of England's controversial monetary policy.

The company's head of investment strategy Alasdair MacDonald added that while recent analysis by the central bank – which found the impact of the policy on pension funds to be "broadly neutral" – may have offered an estimate of the overall impact on yields, it had not made any allowance for what "might have happened anyway without QE".

"Many commentators are suggesting that QE by the Bank of England has led to a significant fall in [index-linked gilt] yields, and pension funds need simply to weather the current storm of low Gilt yields for a few years, before they are able to de-risk at much more attractive terms," he said.

He added that Towers Watson did not believe the current climate was "an excuse for inaction", as there was a one-in-five possibility that yields would not recover and that developed markets would see a scenario similar to that facing Japan.

"A better reason for inaction is the profusion of de-risking options available to UK pension fund trustees at the current time," he said. 

"It is only right that pension funds move forward once they have fully considered all the options open to them, and it is incumbent on the industry to develop more efficient ways of analysing and presenting all these options in a comparable way."

The central bank's policy of QE has been repeatedly attacked by the National Association of Pension Funds since its inception, most recently spurring a debate on an alternative discount rate due to the increased deficits caused by low Gilt yields.

In other news, the £1.4bn (€1.7bn) Royal County of Berkshire pension fund is looking to award an absolute return mandate.

The tender, consisting of three separate lots, seeks advice on the design of the portfolio, as well as the required due diligence and implementation of the mandate.

The final lot asks for a suitable party to monitor the mandate on behalf of the fund.

Describing the final lot in more detail, the tender notes: "The supplier will be in an advisory role, and will be required to make recommendations on manager changes, increases/decreases to individual allocations and monitor the correlation of the portfolio with other parts of the fund's assets."

Interested parties have until the end of November to apply for any of the three lots, with submissions from parties on several of the lots welcomed.

According to the fund's unaudited annual report, Berkshire had an estimated funding ratio of 78% at the end of March.

At the time, the majority of its assets were invested in pooled funds, while less than 20% of assets were directly invested in equities, index-linked and other fixed income, as well as property trusts.