Thousands of pensioners could be missing out on an extra £1,500 a year or more in interest on top of their hard-earned savings.
Researchers at PensionBee found 42 percent of over 65s are earning three percent interest or less on their savings when they could be getting at least five percent.
A person with £50,000 in an account paying two percent would get £1,000 a year in interest but by switching to an account paying five percent, they could get £2,500 a year.
Becky O’Connor, director of Public Affairs at PensionBee, said: “The older generation has the most to lose from keeping money in an account that does not pay a competitive rate of interest.
“Sadly, it appears a high proportion are missing out on the best savings rates. When choosing accounts, hundreds of pounds of interest a year is at stake for retired people, who in general have built up more substantial savings over the years than younger workers.”
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More than 40 percent of pensioners aged 66 to 80 have large cash savings between £20,000 and £200,000, so many of these pensioners could be missing out on thousands of pounds in extra interest a year.
Ms O’Connor said: “Older people need whatever wealth they have built up to last their whole retirement, potentially pay for some care and also to leave an inheritance.
“It’s crucial this money is preserved and so some prefer the safety of cash accounts to leaving their retirement money in the stock market.
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“So making sure they are getting the best return possible on their savings is really important.”
Almost 60 percent of over 65s use instant access savings accounts perhaps as they use some of these funds to help with everyday expenses.
The top rate for an instant access savings account is currently with Furness Building Society, which pays five percent, according to comparison site moneyfacts.
Savers can also get more than four percent with several easy access ISAs with Paragon Bank and Newcastle Building Society both paying 4.5 percent.
Ms O’Connor added: “As interest rates rise and some (but not all) cash savings accounts become more rewarding, it’s important for all savers to also consider things like the maximum limit for Financial Services Compensation Scheme (FSCS) compensation cover of £85,000 and also the personal savings allowance, which allows basic rate taxpayers to earn £1,000 in interest a year before interest becomes taxable.
“For years, this allowance has barely been a concern. However now, more people, especially retired people, will find they meet the allowance relatively easily.
“A basic rate taxpayer with just over £20,000 in an account paying four percent a year could find they face an interest tax bill, for example.”
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