Hart-hit savers need £9,000 extra to achieve £100 annual return as five years ago

 

Savers need to find almost £9,000 extra to maintain the same £100 annual return they would have received five years ago, a study found today.

Consumer help website Moneyfacts highlighted the “heartbreak” faced by pensioners and savers following more than three years of record low interest rates.

It said that five years ago, the average no-notice account paid a rate of 4.08 per cent, and to raise £100 in gross interest would have required a deposit of £2,451.

But as the Bank of England has maintained the base rate at a historic low of 0.5 per cent since March 2009, today's average no-notice account pays 0.90 per cent, meaning someone would need to invest £11,111 to achieve the same level of interest.

Sylvia Waycot, finance expert for Moneyfacts.co.uk, said: “To get the same return on investments as five years ago, you need to find an additional whopping £8,660 to put into an instant access account.

“Looking purely at averages, today you couldn't even put your cash into a five-year bond and get the return of an instant access account five years ago, as they are currently averaging only 3.79 per cent.

“This highlights the heartbreak currently facing pensioners trying to supplement incomes and also potential first-time buyers who are desperately trying to save for deposits.”

Moneyfacts also compared average interest rates paid on accounts for which notice must be given. It found that five years ago, savers would have needed to invest around £2,364 to get £100 gross interest, with average rates of 4.23 per cent.

They would need to invest £8,547 to raise £100 in gross interest today, as the average notice account pays 1.17 per cent, the website said.

PA

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