Why are we saving?

usedup

I am a pensioner, relying on interest from my savings to live on. It is time all pensioners voiced their concerns over the way we savers are being ripped off by this government. If we all withdrew our savings from the banks the government would have to listen!

Mad_old_tory

Pedantic maybe, but what have the government done to erode your savings? It's the Bank of England which has cut the interest rates and they are, regardless of what the conspiracy theorists may think, independent of the government.

Count_Dante

Interest rates are almost zero, but inflation is also plummeting. It is not the absolute return you have to look at, but the return relative to inflation.

If you withdraw your life savings from the bank, do you promise not to whine and beg from the taxpayer when some burglar proceeds to steal them?

Aegis

usedup wrote: »

I am a pensioner, relying on interest from my savings to live on. It is time all pensioners voiced their concerns over the way we savers are being ripped off by this government. If we all withdrew our savings from the banks the government would have to listen!

Causing a mass run on the banks would just make things worse. Not to mention the fact that your money would then not be safe at all: no compensation scheme, no insurance in case of robbery and no interest at all to partially protect against inflation.

If you're living off your savings, why not talk to an IFA to consider switching things into fixed-income asset classes instead of cash? That way you can look into getting a much steadier income for life at the cost of varying capital. Someone with experience of retirement planning ought to be able to get you a much better situation than just cash.

Elder_2

Usedup does have a point.

This government seems to think it can kick sand in pensioners faces and always get away with it. But we could make the government take us more seriously. We do not have to withdraw all our savings from the banks. That would be dangerous for us all as has been pointed out. However it is estimated that pensioners have savings of £1.5 Trillion. It would only take us to go to our banks and obtain a cheque for say 10% of our savings. Holding a crossed cheque at home for up to 6 months is safer than having cash and does no harm to the banks.

However a Sword of Damocles ,totaling £150 Billion hanging over the banks, wondering what we might do (eg lodge it in a Irish Bank) would concentrate our political and banking masters minds wonderfully. No doubt we would see revised savings rates very soon. Remember £150 Billion makes the government bail out of the banks look like small cheese. Our loss of interest would be minimal. After all, 1% of 10% less tax for up to 6 months, is just smaller peanuts.

Think about it. We are not powerless. We could make the government notice us.

It doesn't have to put the banks in jeopardy. It doesn't have to cost us much.

Elder.

Milarky

Slightly more constructively, people just need to become more aggressive in seeking out better rates everywhere. If you can still get 4% then they should locking into that. If everyone had used the window of time from December 2007 (when the BOE first signalled a reverse in the direction of rates down) until October/November 2008 (when they started the current rash of panic reductions) to take out fixed rates then a big proportion of savings would 'non-tracking' today - and at a somewhat higher average level....

Government policy is predicated on interest rate changes having a big effect. In relation to mortgages, about one third of mortgages 'track' the BOE rate, some more are simply 'variable' so only partially track it and the rest are on fixed rate deals anyway. Thus the 'benefits' of cutting rates by the MPC are skewed amongst borrowers; the policy is a 'blunt' instrument even if it can work....

The hope for savers must be that the rate reductions are never fully implemented by lenders; that, as people come off of deals and go onto variable mortgages they can't get off again so quickly, and that lenders (in aversion to the blind pursuit of growth of mortgage books) turn the clock back and make the variable rate ('vanilla') mortgage the norm. They can then move their rates [up] independently of central bank direction - allowing them to balance the rewards of savers and borrowers more prudently?

sh856531

usedup wrote: »

I am a pensioner, relying on interest from my savings to live on. It is time all pensioners voiced their concerns over the way we savers are being ripped off by this government. If we all withdrew our savings from the banks the government would have to listen!

Hi there,

With respect, I think you are arguably getting angry at the wrong people

1. The *government* does *not* set interest rates. Interest rates are set by the Monetary Policy Committe of the Bank of England and by individual retail banks such as RBS, Llyods, Barclays et al.

As such, the interest rate that pensioners are receiving has little to do with the current government.

This surely means that your anger has found the wrong target - at least in part.

2. More broadly, we could have a discussion about whether the government should have stopped individuals and banks from borrowing and lending so much. I certainly have a lot of sympathy for this point of view, however, blaming government is far to convienient and doesn't get even close the the root cause of the problem.

In my mind the people who have done most harm to pensioners (and every tax payer in the country) are the moronic individuals who decided to borrow ridiculous amounts of money with little concern for how it would be repaid. People who bought 250K homes on 20K salaries or who ran up 60K on a credit card buying tat and crap. Then they rollup to the Debt-Free Wannabe forum on www.moneysavingexpert.com asking how to get their debts written off without the slightest concern for who then has to pick up that tab.

Clearly government and the banks themselves do share a fair amount of responsibilty for this whole mess, but at the end of the day, why is it governments job to force people not to act like total chimps?

I'm playing devils advocate to a certain extent here - the government certainly should have stopped the banks lending and individuals borrowing so much, but don't you think that at the end of the day its the banks and individual consumers who are ultimately responsible for their own actions, and not the government?

Best Regards

S

savetilibleed

Count_Dante wrote: »

Interest rates are almost zero, but inflation is also plummeting.

Why does it not feel like it when one looks a supermarket shelf prices. They continue to go up it seems. Just before Christmas things hiked up - I suppose the b88888ds thought hey it's Christmas, everyone will be buying what they want rather than what they need so lets make hay etc. I notice the BOGOF's are appearing again so as long as one is eagle eyed - well it's not so bad I suppose. Umm I think I'm confused :cheesy:

Old_Slaphead

savetilibleed wrote: »

Why does it not feel like it when one looks a supermarket shelf prices. They continue to go up it seems. Just before Christmas things hiked up - I suppose the b88888ds thought hey it's Christmas, everyone will be buying what they want rather than what they need so lets make hay etc. I notice the BOGOF's are appearing again so as long as one is eagle eyed - well it's not so bad I suppose. Umm I think I'm confused :cheesy:

Inflation is plummeting because it includes mortgage interest (I believe).

Most older peoples expenditure is on electric/gas & food. Year on year those costs have increased by 10%+ ????

RocketMan

My wife and I are saving up for a deposit on a house that’s why were saving, house prices come down and it becomes harder to get a mortgage.


I'm curious back in the 80's when the base rate was ~14% can any one remember what interest rates they were getting on savings? I've looked but I can not find any details. I had a NatWest piggy account but I've no idea what rate it was, the Pigs were cool though.

staffie1

sh856531 wrote: »

In my mind the people who have done most harm to pensioners (and every tax payer in the country) are the moronic individuals who decided to borrow ridiculous amounts of money with little concern for how it would be repaid. People who bought 250K homes on 20K salaries or who ran up 60K on a credit card buying tat and crap. Then they rollup to the Debt-Free Wannabe forum on www.moneysavingexpert.com asking how to get their debts written off without the slightest concern for who then has to pick up that tab.

Absolutely spot-on!