One third of British pensioners raiding their savings accounts, study says

In a recently revealed report by investment firm Schroders, one out of every three British pensioners over the age of 65 are plundering their savings accounts in an effort to offset the rising costs of day-to-day living in the UK.

According to the data gathered by Schroders, pensioners have withdrawn from their personal and small business bank accounts an average of over £4,500 each, leading to a total figure of £60 billion.

The most often reported reasoning for the withdrawals has been the low interest rates offered on many financial products currently offered by the UK banking industry.  Since many pensioners are reliant on the interest generated on their savings to supplement their incomes, they are being hit quite hard by the combination of low interest and high inflation.

The new data comes hot on the heels of plans for the coalition Government to have pension payments utilise a lower rubric for measuring inflation; currently the Retail Prices Index is used, which incorporates the current costs of mortgages in its rates.

The Government’s new plan, however, is to link the pension payment scheme to the Consumer Prices Index as a lower-cost alternative as the CPI runs much lower than the RPI on average.

Robin Stoakley, a spokesman for Schroders, commented on the investment firm’s findings.  Mr Stoakley stated that significant amounts of pensioners’ long-term savings accounts were being emptied, based on the amount of working capital that are draining from these accounts en masse.

In a continuation of his statement, Mr Stoakley drew attention to the importance of the issue in relation to individuals either nearing retirement or already retired, since those consumers would have a diminished capacity to rebuild whatever nest eggs they have accumulated in the past.  Additionally, said Mr Stoakley, annuity incomes in decline will not be sufficient to cover day to day living expenses.

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