Smart Money - What the election means for savers

01/07/2015

Now that we’ve all had a little time to digest the outcome of arguably the most unpredictable General Election campaign in living memory, it’s time to turn our attention to what this might mean for savers.

Ahead of the election, pensioners were treated to bonds paying unusually high rates of interest, and we will soon see tax-free saving for 95% of all UK savers.

But, although we have the same chancellor, it remains to be seen if he’ll have the same attitude to savings in the new administration. So far there haven’t been any announcements from the Treasury, but that doesn’t mean they aren’t busy dreaming up new ideas to help beleaguered savers, especially with the summer budget announcement due next month.

Perhaps they’re considering the suggestion of a ‘Lifetime ISA’ mooted by a Think Tank last year, or a ‘Lifetime Bonus Savings Account’ proposed some years earlier? Maybe they’re wondering how to help people with smaller savings pots? Or perhaps they’re looking to those with larger savings balances, on whom the country relies so heavily?

Let’s not forget, without the savers who provide the money to banks and building societies for them to lend, many people wouldn’t be able to get mortgages.

But whatever the outcome, it’s clear that one factor should win out over all others:

Simplicity.

As a nation, we should want to encourage people to start saving, and for those already saving to put away a little bit more each month. But to drive real and sustained change we need to offer savers what they want, accounts that do exactly what it says on the tin.

It’s a shame that all too often, accounts offer great rates of interest but then make savers jump through hoops to achieve them. We’ve all got more important things to do than work out if we’ve already used our third penalty-free withdrawal this year or remembered to check if the bonus rate has expired.

There’s a good chance that base rate and, in turn, savings rates will start to increase next year and when they do, it’s to be hoped that providers do more than just pay higher rates to savers. They should make sure that the account is straightforward too.

As someone more musical than me once said, “it’s not what you do, it’s the way that you do it”.

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