Article by Phil
Research by LCP has found that ISA savers stand to lose out to the tune of over £1,000 each as a result of rising inflation.
Looking at the latest savings figures for 2019, LCP found that there were 3.4 million pensioners who were holding over £87 billion in cash ISA’s which paid little or no interest at all on their savings.
Overall, there are almost 6 million pensioners holding over £300 billion in ISAs with the majority held in stocks and shares ISAs, but it’s the cash ISA savings which are under threat. According to the calculations, with inflation running at 5.4% and cash ISA rates at most 1%, then most savers stand to lose 4.4% in spending power over the year. This figure will be much higher for those who have lower savings rates (0.01% at Nat West currently for example), but also as inflation continues to rise. With £87 billion held in cash by 3.4 million pensioners, this 4.45 reduction in spending power is £3.7 billion or the equivalent of £1,100 per saver on average.
That’s a huge loss in spending power and brings into sharp focus the real risks posed by rising inflation and of course the need to act to protect savings.
The research found that this is likely to impact women more than men as there are more women saving into ISA;’s and saving into cash ISAs at that.
You might benefit from speaking to one of our friendly Money Advisors about your situation.
