A two-speed economy – tough for the main body of population, even tougher for over 60s – has devastated older people’s savings and inflated their basic living costs.
Economist Ros Altmann, Director General of Saga, says pensioners are trapped in a financial crusher squeezing them from every angle, and their spending power has been slashed by nearly a third since 2003.
“If you look at the figures of inflation for over 60s they show that since 2003 inflation for pensioners has risen by 30 per cent. The effect of inflation is incredibly damaging for pensioners,” said Ros Altmann.
“Not only are the price rises they face much higher than for the rest of us - because they spend less on consumer goods that have fallen in price and more on basics and insurances where price rises have been much higher - but they have also seen a dramatic fall in their savings income as interest rates have been cut.
“Pensioners have no way of making up for their lost purchasing power. If government benefits are uprated with consumer or retail prices that do not reflect the price rises facing those living on these benefits, then policy will risk leaving more pensioners unable to afford their basic necessities.
“The government had recently announced changing pension uprating to increase in line with CPI (Consumer Prices Index), but this could seriously damage pensioner income over time.
“Pensioners have no other way of making up their income shortfalls as they are stuck on benefits and income from savings. In addition to this, millions of pensioners are living on pension income from annuities which stay fixed each year.
“Even low inflation rates will seriously erode the spending power in just a few years.
“As the Bank of England yesterday admitted that inflation will continue to overshoot its target, we at Saga are warning of the dangers facing millions of older people facing sharp rises in food, fuel and basic living costs that are not properly reflected in official measures.”
Further information: For further information please contact the Saga Press Office on 01303 771529