Spread your savings

Recent research showed that 90% of cash deposits in Britain are held by the over 50s. This group – sometimes known as “baby boomers” – after benefitting greatly from having bought their homes many years ago and despite the current crisis, are still seeing large gains from property increases and regular savings.

This is different from the current generation who in the last decade or so, have been brought up on instant credit and cheap borrowings.

However, it is the over 60s who need to take care in the current circumstances. Although the Government has announced that it is going to increase guaranteed savings from £35,000 to £50,000 there will still be many elderly savers who have larger deposits than that with a single bank or building society.

The UK is now lagging behind other countries. The US has guaranteed savers up to $250,000 (around £115,000) and banks in Ireland, Denmark, Austria, Greece and – as of the weekend – Germany, have given 100% guarantees.

Some savings in the UK are guaranteed 100%. Now nationalised, Northern Rock’s deposits are covered in their entirety. National Savings & Investment, also backed by the Treasury, offers complete protection on people savings through its products.

However, there is no certainty that the UK will follow suit for all banking institutions.

The problems for our elderly savers are two-fold:

1. They may be unaware of what savings they have. This may seem strange in these cash-strapped days, but many in the 60-plus bracket live on their pension income and do not need to draw on their savings. Having remained untouched for many years, it is easy to forget exactly what they may have in savings accounts, especially if they do not access online banking.

2. Perhaps more critically (as after all, it would be relatively easy to check the figures held in various savings accounts) is that many people are unaware that savings, with what would seem to be apparently different institutions are in fact, part of the same large financial group.

Some examples where financial institutions trade under alternative company names but are in the same group include:

• Halifax, Bank of Scotland, Intelligent Finance (all are soon to be part of Lloyds TSB)
• HSBC, First Direct
• Barclays, Woolwich
• Lloyds TSB, Cheltenham & Gloucester, Scottish Widows

It is a situation that anyone with a large amount of savings would do well to avoid.

The first thing to do is to check your accounts. How much do you have in each?

After that, take your savings books to the relevant local branches and ask which other institutions also practice within their group? Having found that out, you then need to total up how much you have invested with each group and if it totals more than £50,000, then with the current rules you would be wise to consider moving any remaining amount above £50,000 to a different bank or building society – but obviously check which group they are with first!

  What's this?