Old womenGroups representing pensioners and savers have hit out at the Bank of England's decision to unleash more emergency funding, saying banks mired in scandal would benefit the most.

Saga director-general Ros Altmann criticised the policy for keeping inflation higher than it would have otherwise been, making it even harder for people to find any accounts to give them a real return on their savings.

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On top of this, quantitative easing (QE) has made more than a million pensioners worse off, which has damaged growth rather than encouraged it as people have less money to spend, she said.

She questioned whether the "experiment" is actually having the desired effect, in the light of a double-dip recession, falling bank lending, rising borrowing costs and a tough employment market.

Dr Altmann said: "Following fresh banking scandals this week, it is especially difficult to understand why we are doing more easing, which benefits the banks more than any other area of the economy. QE may well have shored up bank balance sheets, as well as helping some borrowers, but this does not boost the economy when banks are failing to lend on reasonable terms.

"QE relies on banks to recycle new money to the rest of the economy but the banks are not doing their bit. Lending to small and medium-sized firms who have been crying out for credit has not come through on reasonable terms, while banks have boosted their margins and balance sheets instead."

Dr Altmann added: "The Bank of England needs to stand back and examine whether this policy, which it has always admitted is just an 'experiment', is working and is acting as a stimulus for growth.

"Conjuring up a further £50 billion of new money, in order to buy government debt at unprecedentedly expensive levels could be saddling future taxpayers with large losses when long-term interest rates return to pre-recession levels."

When they retire, workers use their pension pot to buy an annuity from an insurer, a decision which sets the size of their pension for life. Annuity rates are linked to the yields on government bonds, called gilts, which have been dramatically reduced by QE.

Tom McPhail, head of pensions research at Hargreaves Lansdown stockbrokers, has described the UK's pension annuity rates as in "meltdown" for the past four years. The drop means that a man with £100,000 in July 2008 would have been able to secure an income of £7,855, whereas his younger brother, who hits pension age today would only be able to secure an income of £5,743.