PM hints at help for pensioners in Budget

Thursday, 12 March 2009

It is likely that pensioners will get higher tax-free savings allowances from next month’s Budget.

Prime Minister Gordon Brown said yesterday that the Treasury was looking at policies to help savers who have suffered as interest rates have plummeted nearly to zero. According to the Bank of England returns have dropped to their lowest ever level.

As the base rate has tumbled to 0.5 per cent in recent months, figures from the Bank of England show that returns on savings rates have fallen to an average of 0.17 per cent on instant access savings accounts; notice accounts are paying 0.18 per cent; cash ISAs are paying an average of 0.96 per cent.

Mr Brown was confronted on a phone-in by a caller who accused him of neglecting pensioners. In response the PM suggested that limits on tax-free savings such as ISAs would be raised for pensioners.

He said: “We are looking at how the Individual Savings Account can be made more attractive for the future. We are trying, obviously, to make sure in an era of low inflation that the incentives to save can remain high. These are the things that we’re intent on doing. I think in the Budget you will see some announcements.”

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