Savings are so vital to our Society in good times and bad times. They create the engine of future economic growth and provide a safety cushion for families. Yet despite this no British Government in living memory has put savers ahead of borrowers. We need a fundamental change of attitude to savers from any future Government and the financial sector; this the challenge and task of SaveOurSavers.
We savers have repeatedly been punished in our efforts to provide for the future. Despite the clear economic and social benefits of a thriving savings culture, successive governments have obstructed, neglected, and at times directly attacked the interests of responsible savers.
There is a clear bias against savers expressed in the Government’s economic policies, the tax system, the benefits system, pension regulations and also the way our financial institutions operate.
One issue that affects everybody who saves is the impact of inflation on their savings and the fact that the interest on their savings is taxed even though this doesn’t necessarilly represent a real gain to the saver. In fact in today’s economic conditions with inflation running higher than interest rates, the overall value of the savings is most likley to have reduced and yet we still pay tax as if we made a profit.
Pensioners who reach their retirement after saving up a small pension are suddenly faced with the complexities of pension credit and savings credit, which basically combine to make sure that those who have saved are not really any better off than those who hadn’t bothered.
Pensioners who have managed to put more aside may well benefit from a very welcome increase in the tax free allowance you receive when you reach 65, however for anyone whose income is over £22,900 will find this benefit is steadily stripped away.
Several million potential savers on low-incomes are hindered in their attempts by not having access to the simplest financial products, such as a bank account, that would enable them to begin saving. For many people on a low-income a small emergency fund, is the the only thing between them and high-cost debt when faced with an unexpected emergency.
Banks have cottoned onto the fact that many savers fail to proactively manage their savings and they blatantly exploit this inertia. Many savers, especially the elderly – many of whom have no internet access – find the increasingly complex and fast moving world of finance with its ever changing interest rates and products difficult to keep up with. The end result is that your savings end up in a savings backwater receiving little or next to no interest. If the Government is serious about making it worthwhile to save it must do something to stop this practise.
In the future it looks increasingly likely that we will be faced with auto-enrolment into pension schemes; this may well be a good thing. But auto-enrolment is not an answer in itself unless safe investments which produce a reasonable return are available. Forcing people to join a “pensions casino” where they may well end up worse off than if they hadn’t saved their money, is simply dishonest.