Pensions News

It’s no secret that pensioners who are already drawing an income from their funds are suffering under the credit crisis.

Anything invested in stocks and shares would likely have seen a terrible bounce over the past year since the collapse of Lehman Brothers, followed by the FTSE 100 reaching a high this October.

Despite that positive news, there are still plenty of concerns that the UK could fall into a deeper recession, so things could possibly get worse.

In the meantime, the normal savings vehicles for pensioners are under pressure, with most savings accounts only marginally over the Bank of England’s base rate.

And offshore accounts, of course, still fall under HMRC tax rules, which means the fall in returns from offshore banking mean the tax savings can be pretty slim.

What is really interesting is the observation that savers have become investors, as savers are pushed into fixed term bonds for 2-5 years.

Does this mean that bonds present a safe haven for returns?

Certainly in the short term, but do be careful – if we really are part-way through a double-dip recession, then rampant inflation in the near future could be a very real danger, which could soon make those fixed-rate bond deals look quite low indeed.