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Devastating' cuts for thrifty OAPs

PUBLISHED: 14:31 18 February 2009 | UPDATED: 16:08 25 August 2010

CONCERN: Harbajan Singh said this latest cut could lead to a crisis situation’ for pensioners.

CONCERN: Harbajan Singh said this latest cut could lead to a crisis situation' for pensioners.

THE CUT in interest rates will have a devastating effect on pensioners, according to elderly support groups.

THE CUT in interest rates will have a devastating effect on pensioners, according to elderly support groups.

The Bank of England slashed the interest rates to an historic one per cent this month in a bid to help mortgage holders, but pensioners say they will be the ones suffering.

Secretary of Greenwich Pensioners' Forum Harbajan Singh said this latest cut could lead to a 'crisis situation' for pensioners.

He said: "It will have a devastating effect on pensioners if they have saved a few pennies and if they are paying a mortgage. It is a crisis situation for them.

"They have put away some money and they were just hoping to get some reward out of it."

Peter Coulter, 80, from Bexley said he was hurt badly by the last drop in interest rates 14 years ago after he retired from his post as a general manager for a large manufacturing company.

He said: "They took my money payment and I was earning good money at the time and then I get a pittance back. I would have been better off to stick it in the bank.

"I told people 'don't bother with private pensions' but now I can't give them that advice because of what has gone on with the banks.

"A lot of old people have lost faith in banks and don't bother with them and then they get robbed off £100 [because they keep their money on them or at home].

"It is probably because they didn't get a crack of the whip."

Financial Secretary to the Treasury, Stephen Timms MP said: "The overall impact of this cut in interest rates is to put more money into the economy, especially because of the cuts for many mortgage holders.

"This is important alongside the government's action to cut VAT, help pensioners and put more money into people's pockets.

"Banks themselves benefit from reductions in the Bank of England base rate. We do expect them to pass these benefits on - although there are different ways they can do this, including supporting savers as well as helping borrowers."

marina.soteriou@archant.co.uk

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