What has the Bank done and is my pension safe?

theguardian.com:

For the third time in a fortnight the Bank of England has deployed billions of pounds to buy government bonds and calm financial markets. The mini-budget on 23 September led to panic selling by pension funds, causing them to dump government bonds to raise money. The rout spooked foreign investors, and the Bank is now struggling to bring order back to the markets, despite spending £3.3bn on Tuesday in its single biggest daily intervention since the turmoil began.

Threadneedle Street wants to stabilise the trading by cash-strapped pension funds in UK government bonds, known as gilts. It also wants to prevent a fall in the value of gilts becoming permanent, increasing the cost of government borrowing.

Since the government’s mini-budget, the threat of much higher borrowing costs has become apparent and the only way to prevent a Greece-style run was for the central bank to intervene.

The latest session of panic selling has centred on index linked gilts, which are being sold by pension funds to shore up their precarious finances.

Central banks want financial markets to have a network of buyers and sellers always willing to trade. It is what keeps markets “liquid”, even when prices are falling. But steep falls in the price of financial assets can cause panic and mean there are only sellers.

If we think about gilts as mortgages, then the government has issued millions of mortgages with different repayments dates ranging from a few hours to 30 years.

Final salary pension funds are among the largest buyers of these mortgages, making them one of the largest lenders to the UK government.

When Kwarteng announced huge tax cuts in September without saying how they would be funded, bond traders predicted a surge in government borrowing. This