Prudential Reports Pensioners Set to Lose Â£2.9 Billion of Spending Power Over Next 12 Months
LONDON, August 23, 2011 /PRNewswire/ –
Prudential has reported that pensioners in the UK with additional
savings held in cash ISAs, savings accounts and current accounts could see
their spending power fall by an average of GBP278 each in the next 12
months, according to new analysis. The calculations show that the combined
effects of increased inflation and low interest rates will erode pensioner
buying power by a total of GBP2.9 billion in the coming year.
Pensioners are seeing their cost of living rise 44 per cent faster than
the current rate of inflation. This is because a greater proportion of their
income is spent on goods and services with prices that are rising ahead of
inflation, like fuel and food.
The average pensioner has GBP19,664 in additional savings, but is likely
to see their purchasing power fall considerably as the gap between the
interest rates paid on savings and the rate of Silver RPI eats into the
value of cash nest eggs in real terms.
According to recent research by Age UK, the average annual inflation
recorded by the Retail Prices Index (RPI) has been 3.1 per cent in the
period since January 2008. Silver RPI over the same period has averaged 4.6
per cent – resulting in an annual rate of inflation for pensioners that is
nearly 50 per cent higher.
Vince Smith Hughes, Head of Business Development at Prudential,said:
“Low interestrates and rising Silver RPI mean that many pensioners are
particularly feeling the squeeze,and for those who rely on interest paying
savings accounts to top up their income thechallenge is even greater.
“As most people in Britain feel the financial pressure of rising living
costs, pensioners on fixed retirement incomes are facing even higher levels
of inflation and are suffering disproportionately.
“We strongly encourage people to speak to a financial adviser to ensure
they are making the best use of income-generating investments, bonds and
pension funds where relevant, in order to ensure their income has the
potential to rise and combat increasing inflation and living costs.”
Notes to Editors:
Pensioner inflation figures based on data from ‘Age UK Enterprises
Silver RPI – Measuring the true impact of inflation on those in later life’-
11 May 2011.
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Limited, which is registered in England and Wales. This name is also used by
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