A new report warns that million of pensioners will be almost £280 poorer over the next year. The report blames the combination of increasing inflation and miserly interest rates paid with pensions for the reduced income many elderly people are facing.
The report from insurers Prudential wrote that pensioners were ‘feeling the squeeze’ and that things were set to get worse for them. Pensioners rely on a fixed income more than any other demographic as they often receive a fixed pension income where as those still working would normally see pay increases over time.
Pensioners rely on their annuities, savings, and other investments for their income, and with interest rates at record lows their savings are reducing in real terms week by week. To make things worse inflation is hitting pensioner’s pockets as household bills rocket. Inflation tends to affect those on a pension particularly hard as they are more impacted by faster rising bills such as fuel and energy costs.
‘Silver RPI’ at 4.6%
‘Silver RPI’, the true rate of inflation for the over 55s has been at 4.6% over the last three years whilst average inflation has been at 3.1%.
Head of business development at Prudential, Vince Smith-Hughes, says, “Low interest rates and rising Silver RPI means many pensioners are particularly feeling the squeeze. For those who rely on interest paying savings accounts to top up their income, the challenge 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.”
Pensioners struggling with debt
The report comes at the same time as the charity Consumer Credit Counselling Service (CCCS) said that many pensioners were sinking under a mountain of debt. More than half of pensioners in financial trouble and looking for help have to pay out more in repayments every month than they get from their State Pension.
Delroy Corinaldi, a director at CCCS, said: “These figures show the alarming scale of the debt problem among older people in the UK. I am concerned that an increasing number are at risk of falling into serious debt”.