Accounts for savers over 50 ‘offering the worst deals’

SAVINGS accounts aimed at the over-50s often give a worse return than those which are offered to all age groups, a report warned yesterday.

Experts said it was ‘ outrageous’ that financial giants were targeting older savers with their worst deals.

Researchers looked at all the cash savings accounts available, including instant access accounts, notice accounts and fixed-rate products. Cash Isas were excluded.

Overall, it found the average interest rate offered by the top 20 financial providers for the over-50s is 2.23 per cent – but it is 3.17 per cent for accounts aimed at all age groups.

A saver putting £5,000 into a 50-plus account would get annual interest before tax of £111.50 – but £158.50 if it was in a normal account.

One of the worst culprits is the West Bromwich Building Society which pays only 0.05 per cent before tax on its ‘Oak Account’, which is available to those aged 60 and above.

Another poor example is the Yorkshire Building Society. Its ‘Access Saver for Pensioners’ account pays 0.25 per cent before tax to anyone who is receiving a pension.

Miles Bingham, chief executive of Governor Money, which carried out the research, said: ‘Labelling products as exclusive for the over50s usually implies they come with some benefit or additional value which is not available to the public at large.

‘Our research demonstrates that this is clearly not the case when it comes to savings. Older savers should treat such products with a high degree of caution and not limit their options.’

Simon Rose, from the campaign group Save our Savers, said: ‘When you are getting on in life, it is difficult enough without financial institutions taking advantage of you.

‘It is rather like the use of the word “gold” by financial services companies. It often means that it is an absolutely appalling account.’

The study comes at a crippling time for savers who have been hit for more than three years by the Bank of England’s decision to cut the base rate to the lowest level in history.

The decision to freeze the base rate at 0.5 per cent since March 2009 is the longest period it has gone unchanged since the end of the Second World War.

Dr Ros Altmann, director general of Saga, added: ‘ Savers have suffered significantly as a result of the policy of ultra-low interest rates.

‘It is really important that people shop around for the best rate. Savers are used to the idea that you find a good rate and stay there, but that is not an option any more.’

She said savers urgently need a break, and is calling for people to be allowed to put as much money into a tax-free cash Isa as a stocks and shares Isa. At present, you can only put £5,640 into a cash Isa, but can put double that amount into a stocks and shares Isa.

Dr Altmann said many pensioners are ‘not prepared’ to gamble their money on the stock market, and are only happy in the security of a cash Isa.