Survey reveals elderly Brits raid savings
Investment firm Schroders has revealed a third of Britons aged over 65 are raiding their savings in order to cover everyday living costs.
According to the report, savers have taken out a total of £60 billion, with an average of £4,600 each.
The main reason for the withdrawal of savings is the low interest rate environment – which means this group of people who rely heavily on interest from savings are receiving less income.
The report comes at a time when the coalition Government plans to link pension payments to a lower measure of inflation.
The current system links pension increases to the Retail Prices Index – which includes mortgage costs and is used as the basis for many wage deals.
However, the Government is proposing to link it to the Consumer Prices Index instead, which is typically lower.
Meanwhile, commenting on its findings, Robin Stoakley of Schroders, said: “The amount of capital being drawn down suggests that it is not just rainy-day funds that are being drained, but a significant proportion of individuals’ long-term savings.
”This is particularly an issue for those nearing or in retirement as they have less opportunity to rebuild their savings and declining annuity income proves insufficient to cover their day to day expenditure,” he added.
However, investment advisers have highlighted that there are still some attractive offers available for savers.
Christine Ross, head of financial planning at S G Hambros, said some foreign banks are paying a little more interest.
However, she cautions: “Check that they have a UK banking licence and they are covered by the compensation scheme.”
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