“We can’t divorce today’s inflation figures from QE, a scheme which has been an unmitigated disaster for anyone recently or soon-to-be retired who does not have a final salary pension scheme. I find it deeply troubling that Bank of England officials want to deny the fact that QE has damaged UK pensions as a whole.
"Saga fundamentally disagrees with the IMF's suggestions that buying more gilts will generate economic growth. Indeed, having re-entered recession it is possible that Quantitative Easing has actually weakened growth via its impacts on inflation, pension funds and annuity rates. Buying gilts is simply not the same as creating jobs and growth. This policy may seem to work in academic models, but in the real world, with our ageing population and pension system that is underpinned by gilt yields, the medicine may be doing more harm than good. “
Saga’s Monthly Price Indices*, compiled by research house Cebr, show that inflation on both the RPI and CPI measures remains higher for over 50s compared with the UK as a whole.
The average over 50s RPI inflation figure is still well above 3% and CPI has stayed above the 3% national average too.
Even more worrying, the Saga Price Indices show, that the cost of living in April 2012, compared with September 2007 – when the financial crisis started to really get underway – has risen substantially more for the over-50s than the overall population, on the broad-based RPI measure of prices. While younger age groups benefitted greatly from falling mortgage interest payments as the Bank of England cut interest rates during the recession, older age groups in general failed to benefit from this. Compared with September 2007, the cost of living has risen for different age bands as follows:
• 50-64: 19.1%
• 65-74: 22.4%
• 75 and over: 22.2%
• Whole population (RPI): 16.6%
Dr Ros Altmann continues: “Recent research has shown us that the over 50s have over the last three months revised up their inflation expectations, suggesting that stubbornly high price growth is embedding itself in consumer expectations and therefore impacting on confidence levels. On average the over 50s expect inflation in a year’s time to be 5.1%, up from the 4.7% reported last quarter - they now expect inflation to remain higher for longer which can be a scary outlook for those relying on their savings and pensions to keep them afloat.”
NOTES FOR EDITORS:
*Saga created its own Saga Price Indices, with respected research house, Cebr, to explore how inflation is affecting the over 50s because price rises can be felt differently due to different spending patterns across age groups:
RPI inflation was as follows for the over 50 age bands in April 2012:
• 50-64: 3.5%
• 65-74: 3.7%
• 75 and over: 4.0%
CPI inflation was as follows for the over 50 age bands in April 2012:
• 50-64: 3.1%
• 65-74: 3.2%
• 75 and over: 3.6%
Graphs and tables available on request