Soaring energy bills and rising food prices have driven inflation over 5% in the month of September, causing more misery for savers. The retail price index (RPI) has risen to a 20-year high. So, what now for savers who are set to lose out considerably in real terms?
It has been estimated that savers at the basic level of tax would need to be investing at a rate of at least 6.5% to avoid losing out in real terms, and greater still for higher rate taxpayers. However, the low base rate set by the Monetary Policy Committee to aid growth is leaving very few products available at a percentage that can offset the high inflation rate.
What are the options?
[Find out at Which4U]
Those with defined contribution pension schemes look like they have lost an average of £1,300 in potential retirement income over the last six months, a firm has said.
The statisticians at Alexander Forbes, who calculated these figures, have gone on to blame the drop on falling share values and annuity rates.
This is because, between the beginning of March and the start of September the FTSE 100 share index has 9 per cent to only 5418, and has since fallen a further 4 per cent to 5066 as of last Friday (23rd September).
Alan Carey, of Alexander Forbes, went on to say “the last six months of 2011 have been dire for defined contribution pension savers,” adding that “a combination of falling growth asset values, reduced bond yields and ever increasing longevity has further reduced the value of workers’ pension savings.” Read More »
The Bank of England’s Monetary Policy Committee have kept UK interest rates at the record low of 0.5%.
Figures released this week suggested a slowdown in growth to manufacturing, construction and services, pointing to a weak recovery, which was taken by economists as a sign that the rate would remain the same.
This comes despite the high inflation rate currently at 4% – double the Bank’s target rate.
The Monetary Policy Committee did not talk of any new quantitative easing plans.
The European Central Bank also left rates unchanged for the eurozone, after raising them to 1.25% in April. Read More »