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Interest rate and pension changes 'hurting older people's finances'

By Tom Farley, Fri 13 Aug 2010 - Published in Pensions

Older people could find that their finances are being adversely affected by low interest rates and changes to pensions, it has been suggested.

Mark Bower, managing director of price comparison website moneymaxim.co.uk, noted that the Bank of England's base interest rate remains at its historic low of 0.5 per cent and claimed this is damaging those who rely on their savings for their income.

"A continued period of low interest rates will mean that whereas in the past they had budgeted for a certain level of income from their fund, they are just not seeing that income being achieved at the present moment in time," he explained.

Mr Bower also pointed out that the current level of pensions is lower than it used to be, which is causing immediate problems.

In addition, the expert claimed that changes announced to the state pension system by the government will exacerbate this and lead to a lower income over the long term for older people.

Recent research by Scottish Widows found that 30 per cent of retirees fear that they will not have enough money to enjoy their golden years to the full.