Those over 50′s will be well accustomed to products and services aimed at their age group such as over 50′s life insurance, over 50′s savings and over 50′s car insurance etc. However, a report by Governor Money has found that far from offering better value some of these over 50′s savings accounts offer no benefits over regular savings accounts, in fact sometimes they are worse. The company researched the top 20 savings accounts aimed at the over 50′s and found that on average they pay around 2.23% in interest. However the top 20 savings accounts aimed at all age groups pay an average of 3.17%, meaning you would be better off using these products instead of ones designed for the over 50′s.
Take as an example someone with who has invested £5,000 into a savings account. With an over 50′s account they would on average gain just £111.50 a year in interest. However, the average amount of interest earned with a regular savings account would be £158.50. The reason why these findings are so concerning is that there are over 21 million people over the age of 50 in the UK and they control 70% of the country’s wealth. Miles Bingham CEO at Governor Money said often there were expected benefits from products aimed at the over 50′s such as with car insurance, where older drivers are rewarded with lower premiums as they were less likely to make a claim. He said that…“…the recent Budget and subsequent “granny tax” controversy shed the spotlight on the finances of older people. Labelling products as exclusive for the over-50s usually implies they come with some benefit or additional value not available to the public at large.”
By looking only looking at savings accounts aimed at the over 50′s, individuals would be ignoring over 93% of other savings accounts, some of which will probably offer better rates. Moneyfacts.co.uk last year said that banks and building societies had been targeting the over 50′s age group in order to build up their retail banking balance sheets. They said that this age group was preyed upon because they were more likely to have disposable savings, a mortgage paid off and would want a secure a dependable return from their savings as they maybe approaching retirement. They echoed today’s message that only focusing on over 50′s savings accounts would mean missing out on some of the best paying accounts.
Responding to today’s report, Ros Altmann Director General at SAGA says that savers should be allowed the invest as much into a cash ISA as they can into a stocks and shares ISA. Currently the maximum you can put into a cash ISA is £5,640 per year but you can invest double in stocks and shares. Altmann argues the over 50′s are ‘not prepared’ to gamble their savings on the stock market.
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