Brits 'unsure about effects of inflation and tax on savings'

By Sarah Engle, Wed 23 Jul 2008 - Published in Banking

Savers in the UK do not understand the effects inflation and tax could have on their savings when they come to compare money-investment schemes, according to National Savings and Investments (NS&I).

Research by the government-backed group has revealed 31 per cent of Brits said they knew what inflation was but they did not understand how it would affect their savings.

Another nine per cent admitted they did not understand inflation at all.

Meanwhile, 28 per cent of those questioned said they did not know how tax would affect money they had set aside for a rainy day.

John Prout, NS&I's sales director, said the findings were a cause for concern.

He advised inflation means Ł100 today will buy more than it can in a year's time.

Mr Prout stated: "It can be caused by increases in salaries, increased demand for items or a decrease in supply which all push prices up."

Elsewhere, a recent poll by Zurich has shown 64 per cent of Brits believe they may have to carry on working after the official retirement age.

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