Further Misery for UK Savers as Inflation Erodes Value of Savings Pot

By: MoneyFacts

Savings rates are still annoyingly low, with the average no notice rate currently at 0.81%, not far above bank base rate.

The recent published inflation figures shows that the real return after basic tax and inflation on an average no notice savings account is at a worrying minus 1.25 per cent, the lowest since May this year.

Darren Cook, Spokesman for Moneyfacts.co.uk, commented: “Low bank base rates are designed to encourage savers to plough their savings back into the economy, but this serves little or no benefit to those who rely on interest from their hard earned wealth to subsidise their pension. 

“Most pensioners who are likely not to have to make a mortgage repayment are seeing their savings being eroded on average by 1.25% per year for a basic rate taxpayer and 1.41% for a higher rate taxpayer. 

“This is extremely unfair for those savers who have made prudent or astute decisions in the past and are being hit by low rates and rising inflation.

“Savers need to secure a gross return on their savings of at least 2.38% to break even. Higher tax payers need to achieve the near impossible, by trying to find savings rates that return at least 3.17%.  

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