Following the Bank of Englandโs decision to increase interest rates to a 15-year high of 4% has been met with concern from the pension industry.
Andrew Megson, CEO of My Pension Expert, and Mohsin Rashid, CEO of ZIPZERO comments:ย โAnother jump in interest rates, now to a 15-year high, would be great news for pension planners in times of stability โ but weโre not in those times. The base rate is still less than half the rate of inflation, meaning peopleโs savings are losing value in real terms.
Interest rates and pensions cause concern
โLiving costs are continuing to rise and this is placing relentless pressure on retirement plans. My Pension Expertโs own research found that only 35% of Britons think theyโll be able to retire when they want to. It certainly seems that Jeremy Hunt might get his wish to keep more people in their 50s, 60s and even 70s staying in work. But, of course, it is not for him to demand that.ย
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โRather, everything possible should be done to support people in their financial planning, allowing them to achieve the retirement they deserve despite these volatile economic times. To that end, more should be done to champion the role of independent financial advice. While there are likely to be tough times ahead, seeking advice will provide welcome reassurance that Britons are doing all that they can to protect their hard-saved pension savings and achieve their retirement goals.”
Hopes for no interest rate hikes crushed
Mohsin Rashid, CEO of ZIPZERO, said: โMany had hoped the IMFโs sobering analysis earlier this week, revealing that the UK is to be the only major economy to shrink in 2023, would inspire the Bank of England to hit the brakes. Instead, the MPCโs latest increase marks the tenth in a row since 2021 and a devastating blow to British consumers and businesses.
โWith the outlook on Britainโs growth so bleak, the Bankโs latest step is likely taken with great reluctance and yet taken, nonetheless. Clearly, the Bank of England has no faith in the Governmentโs ability to tackle inflation alone, which has remained in double-digits for months.
โYet such increases are simply not sustainable. As the Chancellor continues to shout about making Britain the next Silicon Valley, interest rates now stand at their highest level since 2008 and life continues to get harder.
โAbandoned by their government and faced with great uncertainty ahead, consumers and businesses must band together and provide mutual support. For businesses, that means restraint, they must avoid passing rising costs onto consumers and focus on incentivising loyalty, through which consumers will return the favour.โ
