What will the government to to help savers

nilrem_2

gozomark wrote: »

inflation has been slashed just as much, so you should be no worse off compared to when interest rates were higher

What nonsense, for people who live off their savings interest either in it's entirety or to top up a low pension it does not matter how low inflation is, if you don't have the income you cannot buy!

Also the things that are going down are not the essential things we need it's mostly luxury goods like high tech stuff, my council tax is up this year not down, I have seen no reduction in my water rates, heating costs or electricity and many food items have seen massive increases recently, even if food prices decrease by 10% now they will still be way up on 2007/2008 prices!

1echidna

nilrem wrote: »

What nonsense, for people who live off their savings interest either in it's entirety or to top up a low pension it does not matter how low inflation is, if you don't have the income you cannot buy!

Also the things that are going down are not the essential things we need it's mostly luxury goods like high tech stuff, my council tax is up this year not down, I have seen no reduction in my water rates, heating costs or electricity and many food items have seen massive increases recently, even if food prices decrease by 10% now they will still be way up on 2007/2008 prices!

I was going to give a rude response but I will just question whether this answer is obtuse because of a political agenda and the answerer is pretending to be thick (to put it charitably) A saver is drawing on his capital whether it is eaten away by inflation or by him withdrawing an actual sum from his capital. He is no worse off in terms of the real declining value of his savings.

jon3001

nilrem wrote: »

What nonsense, for people who live off their savings interest either in it's entirety or to top up a low pension it does not matter how low inflation is, if you don't have the income you cannot buy!

Also the things that are going down are not the essential things we need it's mostly luxury goods like high tech stuff, my council tax is up this year not down, I have seen no reduction in my water rates, heating costs or electricity and many food items have seen massive increases recently, even if food prices decrease by 10% now they will still be way up on 2007/2008 prices!

These pensioners trying to derive an income from savings interest are idiots. As others have posted, everytime you spend your interest the value of your capital goes down in real-terms. And interest rates are highly variable as we see.

Deposit accounts are short-term instruments that aim to preserve the real value of one's capital.

Deriving an income is a long-term requirement and the capital should be invested. Capital fluctuations (as we've seen lately in the markets) should be of no concern for someone wanting income. A diversified portfolio of bonds, equitity income and even property funds would provide a more stable and diversified income stream.

Right now you can get equity income funds paying dividends over 10 times the BoE base rate!

metrobus

Food ,electricity,gas,cost of travel..
In other words basic needs that we all have to have,
have all increased dramatically over the last 12 months,electricity
alone by 28%.
The inflation figure is a complete joke for Joe public whose main outgoings are on eating,heating, and general survival,
The people who massage these figures should start putting share prices into the
equation then we really would have deflation.
I`ve probably given them an idea now.

gozomark

rather than accusing people of massaging the figures, how about doing some homework - look at whats in the CPI and RPI indicies, and come up with concrete examples of how its being massaged. Eg - you say electricity is up 28% - what is the CPI and RPI electricity component up ?

Thats alot more useful than just spouting off

tradetime

I have to say in all fairness, I have a lot of sympathy for pensioners living off savings, and I think it's a bit harsh to refer to them as "idiots" Yes we're all so big and clever we know that pure savings are an inefficient use of spare capital, but people of pensionable age now in the main did not have the financial education or awareness that is prevalent now, and with all that clever financial awareness our generation created this mess we are in now, go figure.
As for the inflation / savings rate, unless you are capable of thinking in pure financial mode, it's not that easy to see. Your savings rate changes overnight, one day your earning 5% bosh next day your earning 4.5%, easy to see, and that drop will be reflected all in one place on your interest statement, however the inflation/disinflation change as I see it is far more gradual, and much harder to see, and I operate in financial mode most of the time. I don't know "exactly" how the statistics office actually go about compiling their stats, but I do wonder if a lot of price falls in foodstuffs are not passed along in offers such as 3 for 2 I don't watch prices that closely, but there are items that stick in my mind for some reason, and I know they went up, but the price has not come down unless you participate in the 3 for 2 type deals. I'm afraid I don't believe it's all as clear cut as is made out either.
One positive thing though, is that these type of discussion should help the next generation of pensioners better prepare for that time in their life, assuming we all get there

1echidna

Thankyou tradetime for a thoughtful post. The only point I would like to come back on is that I think many people relying as best they can on savings are not stupid, indeed they may have made a wise choice in not investing some or all of their money, based on the present state of affairs. What I object to is people (basically agin the government on anything and everything), who must (or bloody well should) know better, latching onto the argument (in effect) that the real value of savings is decreased by having to draw on the capital but not by inflation.

baby_boomer

The government has screwed savers by pressurising the Bank of England to reduce interest rates to 0.5%.

The government has screwed savers by putting the bill for the collapse of Bradford & Bingley & the Icelandic banks onto savers via the Financial Services Compensation scheme.

The government will screw savers by unleashing inflation via quantitative easing.

The government will screw savers by increasing taxes on savings once the full extent of the bill of bailing out the banks is known.

Any gesture the government makes towards savers in the future will be insignificant compared to any of the above.

gozomark

1. the govt has helped savers by effectively guaranteeing 100% of their savings - not exactly insignificant....
2. BoE is independent - they cut rates due to deflation
3. FSCS - thats what the FSCS is there for - would you rather B&B savers were left out in the cold ?
4. QE - only if interest rates don't keep up with inflation
5. we are all going to be paying higher taxes

Masomnia

baby_boomer wrote: »

The government has screwed savers by pressurising the Bank of England to reduce interest rates to 0.5%.

Screwing savers by protecting their jobs, and the economy in general. I take the point about pensioners, but factor in fuel allowances and a rise in pension way above inflation and I think it shows they haven't been entirely screwed.

The government has screwed savers by putting the bill for the collapse of Bradford & Bingley & the Icelandic banks onto savers via the Financial Services Compensation scheme.

Government screws savers by protecting savers. Not sure I see your logic.

The government will screw savers by unleashing inflation via quantitative easing.

If inflation does indeed occur, which yes it probably will, then interest rates are low enough to provide enough scope for them to be raised in future to guard against this.

The government will screw savers by increasing taxes on savings once the full extent of the bill of bailing out the banks is known.

As gozomark says everyone will have to pay extra taxes, it isn't just savers who are getting shafted.

Any gesture the government makes towards savers in the future will be insignificant compared to any of the above.

That's likely going to be in the form of raising the ISA allowance, which kind of negates your previous point.