Research from PensionBee found that retirees could face steeper losses than the rest of the population due to high street banks failing to use the Bank of England’s base rate rises to savers.
Of the 1,000 respondents aged between 66 to 80 years old, 42 per cent had substantial cash ranging from £20,000 to over £200,000 after a lifetime of work.
But 42 per cent of savers aged 65 and over reported earning three per cent or less on their savings.
More than one in six of both workers and retired people did not know the interest rate currently being paid on their savings, meaning they are likely to be missing out on top rates.
Pensioners prefer instant-access accounts
The disparity in interest earned on savings is increased by pensioners’ preference of instant-access accounts, which usually have a lower rate of interest.
Over half of this group opted for instant-access compared to 37 per cent of working age savers. The findings saw only one per cent of working age adults having savings worth £200,000 or more, compared to five per cent in over 65s.
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. 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. So making sure they are getting the best return possible on their savings is really important.”
