Pensioners 'to lose millions in spending power over next 12 months'

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Pensioners 'to lose millions in spending power over next 12 months'

Thu 18th Aug 2011

The combination of low interest rates and a rise in living costs is having a detrimental impact on UK pensioners, claims Prudential.

Pensioners could see their spending power fall in the next 12 months by an average of £278 each as the cost of living increases at a 44 per cent faster rate than inflation.

According to research from Age UK, the current inflation rate stands at 3.1 per cent, which will erode savings values by £2.9 billion, although some companies claim this rate is higher.

"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," said Vince Smith-Hughes, head of business development at Prudential.

A recent study from Barings Asset Management claimed that close to 13.6 million people in the UK, or 38 per cent of all British working adults, do not have a pension with over a quarter surveyed in the 55 to 64 age bracket having no retirement savings plans at all.

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