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Pensioners lose the value in their savings

Pensioners in the UK with cash ISAs, savings accounts and current accounts could see their spending power fall by an average of £278 each in the next 12 months, according to new analysis by Prudential.

The average pensioner has £19,664 in savings, but the combined effects of increased inflation and low interest rates will erode pensioner buying power by a total of £2.9 billion in the coming year.

The cost of living for pensioners has risen 44% faster than the current rate of inflation, with a significant portion of savings spent on goods that are rising ahead of inflation, such as fuel and food.

Vince Smith Hughes, head of business development at Prudential, said: “Low interest rates and rising Silver RPI mean that many pensioners are particularly feeling the squeeze, and 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.

“We strongly encourage people to speak to a financial adviser to ensure they are making the best use of income-generating investments, bonds and pension funds where relevant, in order to ensure their income has the potential to rise and combat increasing inflation and living costs.”

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