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crashmonitor

Pensioners Protest Over Low Interest Rates

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A bit of an unholy alliance with housepricecrashers here.

Not got a lot of sympathy, however. Indeed more than half my income comes from interest on cash savings, but I haven't got the added security of a state pension. Moreover, a bit of an exaggeration about the plight of savers. Over the last five years I have earned well in excess of inflation and even now the 1.9% CPI is easily doable.

If they want more income they have age on their side and can practise drawdown, something I can't do yet at only 50.

At the end of the day I just just hate moaners even if they are on my side. Whether it is the bankers, the bonuses moronic moaners or someone supporting my interests.

http://www.express.co.uk/news/uk/463504/Savers-protest-against-the-Bank-of-England-in-fight-for-bigger-pension-payouts

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They need to choose which they want the most: bubble home prices or savings interest.

I suspect they are also in the unenviable position of having mortgage equity release options on their property. By definition large pensioner savers will be almost entirely mortgage free. If they want to leave their mega pots to their kids and take advantage of the ultra generous 650k tax free inheritance then it is their only bloody fault if they can't afford the world cruise, which they most certainly could with all the options open to them.

Edited by crashmonitor

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Over the last five years I have earned well in excess of inflation and even now the 1.9% CPI is easily doable.

I think you will find that most will be paying tax on that, so things are not a rosy as you make out.

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I think you will find that most will be paying tax on that, so things are not a rosy as you make out.

Could easily have had that sheltered in ISAs (over six figures) not to mention NS and I index linked certs.

If they are tax payers with a near 11k personal allowance and mortgage free accommodation, that is very comfortable position to be in compared to young families strugging with high rents or large mortgages. Protesting when you are actually quite comfortable makes me cross.

Edit. assuming they had ignored ISAs altogether they would need incomes of 2790 (10% savings relief) + 10660 = 13450 before paying tax at 20%. I would suggest dream land for most young people if they were mortgage free and had incomes over £13450 net of tax.

Edited by crashmonitor

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I suspect they are also in the unenviable position of having mortgage equity release options on their property. By definition large pensioner savers will be almost entirely mortgage free. If they want to leave their mega pots to their kids and take advantage of the ultra generous 650k tax free inheritance then it is their only bloody fault if they can't afford the world cruise, which they most certainly could with all the options open to them.

Some will doubtless have equity release biting at their heels in lieu of savings income. The equity release and care home industry combined could (inadvertently) be quite HPC friendly, as it provides the prod required to sell up once the equity release has been tapped out.

With care home fees running well in excess of rents achievable by renting out even a large house, the pressure will be kept on ageing people in big houses to sell up. Equity release firms will only advance around a third of the market value, to guard against a >100% LTV for those that live longest.

A typical person in a decent sized family home worth £350k could be advanced £120k in equity release to pay for £500/week residential or £750/week nursing care.

So someone in a well above average place might have enough money to pay for between 3-5 years of care. Then what? If prices are stable, they have £240k of theoretical equity they cannot get at without selling, and which is of course being eaten at ~6%(of the released £120k) per annum, typical equity release interest rate. On said £350k property that might mean £600/month going to the equity release company, and rising all the time. Might make people more open to negotiation?

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Some will doubtless have equity release biting at their heels in lieu of savings income. The equity release and care home industry combined could (inadvertently) be quite HPC friendly, as it provides the prod required to sell up once the equity release has been tapped out.

With care home fees running well in excess of rents achievable by renting out even a large house, the pressure will be kept on ageing people in big houses to sell up. Equity release firms will only advance around a third of the market value, to guard against a >100% LTV for those that live longest.

A typical person in a decent sized family home worth £350k could be advanced £120k in equity release to pay for £500/week residential or £750/week nursing care.

So someone in a well above average place might have enough money to pay for between 3-5 years of care. Then what? If prices are stable, they have £240k of theoretical equity they cannot get at without selling, and which is of course being eaten at ~6%(of the released £120k) per annum, typical equity release interest rate. On said £350k property that might mean £600/month going to the equity release company, and rising all the time. Might make people more open to negotiation?

Also illustrates the folly of trying to pass on your wealth. If you are unfortunate enough to require a care home then it makes no difference whether you have got wealth or not your place is guaranteed. So little sympathy with equity rich pensioners who choose not to release equity prior to death or before the care home takes it anyway.

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