Millions losing money on savings

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Millions of savers are losing money as they are caught between poor returns and a rising cost of living, figures showed yesterday. Savers had already been badly hit by shrinking returns on accounts after Bank of England interest rates dropped to 0.5 per cent. But a jump in inflation to 3.5 per cent, according to official figures came as a further blow to pensioners and others living off a nest egg. Politicians and financial experts said ti would leave millions "devastated".

The rise in the Consumer Prices Index means basic rate taxpayers now need to earn 4.38 per cent on their savings before they begin to see a real return, while higher rate tax payers need 5.83 per cent. With typical rates on a no-notice savings account dropping to just 0.73 per cent in the past month, basic rate taxpayers are losing the equivalent of 2.92 per cent a year, and higher rate tax payers are losing 3.06 per cent, according to personal finance experts Moneyfacts.

Source : Daily Telegraph page 1 - 17.02.10. Also reported in Daily Mail page 10, The Times page 42, The Guardian page 2, The Independent page 15 and Financial Times page 2.

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