News in Review

The release of the latest Economic Outlook from the Organisation for Economic Co-operation and Development (OECD) last week, highlighted that global GDP is now projected to slow this year to around 3%, remaining at a similar pace next year. This is a downgrade following estimates of 4.5% global growth this year, made last December. Outlining the situation, the OECD deduce ‘The war has set the global economy on a course of slower growth and rising inflation – a situation not seen since the 1970s.’

Aptly entitled ‘The Price of War,’ the report outlines the far-reaching impact of the invasion in Ukraine and its role in triggering a global cost-of-living crisis. Before the war, the global economy was on track for a strong, although uneven, recovery from the pandemic. According to the report, inflation projections currently stand at almost 9% for OECD countries this year, double previous projections. The new projections from the international think tank detail the impact the war is having on inflation, which has already reached 40-year highs in the UK, US and Germany. In fact, data from the US last week pointed to surging levels of inflation, potentially paving the way for a series of aggressive interest rate hikes.

UK GDP is expected to grow by 3.6% this year, before stagnating in 2023. The OECD expect continuing high energy prices, labour and supply shortages to push inflation to a peak of 10% towards the end of the year, reducing to around 4.7% in Q4 2023. In response to the OECD projection for the UK growth forecast, a spokesperson from HM Treasury responded, “While we can’t insulate the UK from global pressures entirely, our economy is in a strong position to deal with these challenges. We have a plan for growth, and we are supporting people with the cost of living.” It is expected that a tight labour market will support consistently low unemployment statistics.

Data from the Office for National Statistics (ONS) released this week showed that UK GDP shrank by 0.3% in April, the first month that all main sectors (manufacturing, construction and services) contributed negatively to GDP since January 2021. The decline was primarily triggered by the reduction of the NHS Test and Trace programme, which fell by 70% in April as tests ceased to be free.

Accelerating the energy transition

In the report, OECD Chief Economist and Deputy Secretary-General, Laurence Boone outlined his thoughts on the need for governments to ‘shift gear’ to speed up the energy transition, ‘Limiting Russia’s ability to finance the war, as is intended by an embargo on Russian oil exports, is essential for speeding up an end to this devastating conflict.’ He continued, ‘The emergency response to a possible energy crisis has turned out to be a stark scramble for alternative sources of fossil fuels and to increase coal use. This can only be temporary as it is the opposite of what the world needs, which is a rapid increase in investment in, and consumption of, cleaner energy.’

Central banks – time to decide

The World Bank has cautioned that a period of high inflation and tepid growth is threatening to ‘derail what is now a precarious recovery,’ citing it would be ‘hard’ for many countries to avoid recession. The warning comes as the European Central Bank has signalled an end to its pandemic-era money-printing programme, paving the way for the first interest rate hike in eleven years. This week the Bank of England and the US Federal Reserve will conclude their latest monetary policy meetings. It’s time to decide whether they too should lift interest rates even higher to tame inflation or resist as the economy slows.

UK housing market records 10.5% annual price growth

The Halifax House Price Index has shown that average house prices have risen 10.5% in the year to May, to a new record of £289,099. Although the eleventh consecutive month of increases, the pace of growth has started to moderate, from the 10.8% (in the year) recorded in April.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

BTL investors tap into domestic holiday demand

Pandemic-related travel restrictions have unleashed huge demand for UK-based rentals among British holidaymakers – with buy-to-let (BTL) investors scrambling to take advantage.

According to figures1, holiday let mortgage availability has trebled since 2020, giving would-be investors ample opportunity to tap into this demand. There are now 231 buy-to-let mortgages eligible for holiday lets on the market, versus just 74 back in August 2020.

As the number of deals increases, competition between lenders is also on the rise, with average rates reducing from 4.14% in September 2021 to 3.92% in January 2022.

Factors to consider

If you’re thinking about investing in a holiday let, there are some factors to consider before taking the plunge. Firstly, the government is currently working to close a tax loophole that has seen people claiming tax relief on empty ‘holiday lets’. Holiday let owners will soon be required to prove that their property is being let for at least 70 days each year in order to claim small business tax relief.

Secondly, it’s important to think about the cost of purchasing a holiday let above and beyond the property itself. For example, you may have to spend a significant amount up-front to get the property ready for holiday let clientele. You’ll also have to consider how much the property is likely to generate in rental income – is it in a good enough location to attract a steady stream of holidaymakers?

Weigh it up

We’ll be able to help you weigh up the various factors and recommend mortgage finance that’s suitable for your needs.

1Moneyfacts, 2022

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

How to value financial advice

In recent times the importance of expert financial advice has become greater than ever, as people seek reassurance that their pensions, investments and protection plans are being professionally looked after during uncertain times.

Good financial outcomes are obviously important, but these can only be measured over the long term and are just one way of assessing the value that advice can provide.

The real value in taking advice is about the whole journey of financial planning so that you are provided with a consistent, valued and trusted experience; with regular reviews and adapting to changes when needed. Financial and emotional outcomes play their part in unison.

The benefits of working with an adviser

Some of the benefits may not be immediately obvious, such as:

• Understanding your circumstances by listening, and helping you to identify and achieve your goals – no two clients will have the same requirements

• Making complex matters easy to understand – a seemingly straightforward financial goal could involve numerous decisions as well as considering a range of different products and providers

• Ongoing support and guidance – regular reviews and contact can set your mind at rest and prevent you from making knee-jerk decisions at the wrong time

• Saving you time – doing your own research can be very time-consuming and would you know where to start?

• Giving you peace of mind – by knowing that your finances are in expert hands and that any change in your circumstances can be discussed with someone who knows you personally

• Getting financial outcomes that matter to you – by working with you over the long term.

Here for you

In uncertain times, you can rest assured that we are here to support you with all your financial planning needs.

The value of investments and income from them may go down. You may not get back the original amount invested.

News in Review

‘There’s a real pent-up desire among the population to get out and enjoy itself’

Over the last week, the Queen’s Platinum Jubilee celebrations largely dominated the news. The extended bank holiday weekend provided an opportunity for people and communities throughout the UK to come together to celebrate the historic milestone. Official events over the long weekend included Trooping the Colour, Beacon Lighting, a Service of Thanksgiving, a Party at the Palace and a Pageant topping off the celebrations on Sunday.

With four days of festivities for the nation to enjoy, leading trade bodies UKHospitality, the British Institute of Innkeeping (BII), Hospitality Ulster, and the British Beer and Pub Association (BBPA) expect the hospitality industry to have enjoyed a bumper weekend of takings, with predictions of a 22% increase in trade over the four-day celebrations.

In a joint statement, the four trade organisations outlined, ‘At last, our beleaguered sector is able to look forward to the sort of trading period that will give it a massive boost as it sets out on the long road to post-pandemic recovery. There are still lots of hurdles that businesses have to clear on the way back to profitability – huge cost increases, a staffing crisis, rising COVID rent repayments and too much red tape – but these four days will do wonders for income and for employee morale. It’s also a wonderful, celebratory moment for millions of people who’ve been denied the opportunity to socialise with friends and family for far too long, and we sense there’s a real pent-up desire among the population to get out and enjoy itself.’

With the Jubilee weekend expected to provide a massive boost to UK retail and hospitality businesses, revellers are expected to have spent in excess of £2bn on food and drink supplies, while pubs, bars and restaurants are hoping for £3bn in sales, £400m more than during a normal Thursday to Sunday in May. UK retail footfall was forecast to rise 8% over the weekend, with a 10% jump on high streets.

PM wins vote of no confidence

On Monday night, Conservative MPs voted by 211 to 148 to retain Boris Johnson as Prime Minister and party leader. The result means the PM cannot be challenged from within the Conservative ranks for one full year. The vote was called after 54 Conservative MPs submitted letters to the 1922 Committee demanding that Boris Johnson’s leadership be contested.

Help to Buy application deadline brought forward

Homes England have revealed that the government’s Help to Buy scheme is winding down two months earlier than initially planned. The deadline has been updated on the government’s website, ‘The Help to Buy: Equity Loan scheme will close to new applications at 6pm on 31 October 2022,’ brought forward from 31 December 2022.

Recent data published by the Department for Levelling up, Housing and Communities showed that 8,913 properties were purchased with an equity loan under the scheme in Q4 2021, down 41% on Q4 2019, prior to the pandemic.

“Blockbuster” jobs data across the pond

The latest data from the US Labor Department showed that US employers added more new jobs than expected in May, with payrolls rising by 390,000, exceeding forecasts of a 325,0000 rise. Although the increase was the slowest for a year, the unemployment rate held at 3.6% for the third consecutive month. The annual rate of inflation in the US was 8.3% in the year to April, a small drop from 8.5% recorded for March which was the highest rate since 1981. On Friday, US President Joe Biden said that the economy was moving to a “new period of stable, steady growth.” He continued, “We aren’t likely to see the kind of blockbuster job reports month after month like we had over this past year, but that’s a good thing. That’s a sign of a healthy economy with steady growth, rising wages for working families, everyday costs easing up, and shrinking the deficit. That stability puts us in a strong position to tackle what is clearly a problem: inflation.”

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

All details are correct at time of writing (8 June 2022)

Economic Review – May 2022

Bank warns of deteriorating outlook

The Bank of England (BoE) has warned that the UK faces a “sharp economic slowdown” in the coming months as it continues to raise interest rates in a bid to dampen rapidly rising prices.

Following its early-May meeting, the BoE’s nine-member Monetary Policy Committee (MPC) voted by a 6-3 majority to increase the Bank Rate from 0.75% to 1.0%, with the three dissenting voices each calling for a bigger hike to 1.25%. This was the fourth successive meeting that the MPC had raised rates, taking them to their highest level since 2009.

Central banks around the world are currently scrambling to cope with surging inflation which began after the post-pandemic reopening of the global economy and has continued to spiral following Russia’s invasion of Ukraine. Policymakers, however, are also trying to avoid sending their economies into a slump, which is creating a policy dilemma.

Speaking after the MPC announcement, BoE governor Andrew Bailey admitted, “We are in a very difficult position.” He added, “We’re walking a very narrow path between inflation on the one side, which is much higher than we want it to be, and on the other side very big external shocks which are causing a big loss of real income for people and businesses in this country.” Mr Bailey went on to warn of a “material deterioration in the outlook” for growth.

While falling short of predicting a technical recession – defined as the economy shrinking in two consecutive quarters – the BoE is now forecasting a decline in growth across the final three months of this year, with the economy then contracting by 0.25% in 2023. Minutes from the May MPC meeting though still point to further rate rises ‘in the coming months,’ with BoE Chief Economist Huw Pill recently warning “tightening still has further to run.”

Cost of Living Support package

After facing mounting pressure, Chancellor Rishi Sunak has unveiled a further package of measures designed to ease the impact of soaring prices on household finances.

The announcement, made in the Commons on 26 May, was the Chancellor’s second emergency policy intervention of the year and came days after energy regulator Ofgem said its gas and electricity price cap looks set to rise by 40% in October. The move would see the average household energy bill rise by a further £800 a year to £2,800, prompting Ofgem to warn that the number of people living in fuel poverty could double to 12 million.

Mr Sunak said the new package offered “significant support for the British people” with every household set to receive an energy bill discount of £400 in October, with extra financial help targeted at poorer households, pensioners and the disabled. In total, the Chancellor said the combined measures were worth £15bn, taking the overall amount of government support pledged this year to around £37bn.

The Chancellor also announced that the cost of the support package will be partly offset by a “temporary and targeted energy profits levy” on oil and gas firms which will see the tax rate on North Sea profits rise from 40% to 65%. This temporary increase is expected to raise £5bn for the exchequer this year but will be phased out when oil and gas prices return to normal levels.

Responding to the announcement, Institute for Fiscal Studies Director Paul Johnson said, “Rishi Sunak has announced a genuinely big package of support. On average the poorest households will now be approximately compensated for the rising cost of living this year.” However, Mr Johnson also suggested that, if energy prices remain high or rise further, “it may turn out hard to ensure these changes are genuinely temporary.”

Markets (Data compiled by TOMD)

At the end of May, EU leaders moved toward an agreement in principle to ban 90% of Russian oil imports by the end of the year, pushing the price of Brent Crude higher. This benefited the blue-chip FTSE 100 as energy giants ventured into positive territory on the news.

In addition, one of the indices largest stocks, consumer goods giant Unilever, jumped following news that activist investor Nelson Peltz was appointed to the board, heightening expectations of an overhaul at the company.In the UK, the FTSE 100 closed May on 7,607.66, a gain of 0.84%, while the FTSE 250 and AIM recorded monthly losses of 1.40% and 4.55% respectively. In Japan, the Nikkei 225 ended May on 27,279.80, up 1.61%, and the Euro Stoxx 50 closed the month down 0.36% on 3,789.21.

A favourable batch of quarterly earnings and signs that recent economic data prices were peaking helped buoy investor sentiment in the US during the month. Following the Memorial Day holiday, President Biden and Fed Chair Jerome Powell met to discuss containment measures to combat rising consumer prices, supply chain disruptions and soaring energy costs, which are weighing heavily on the economy and markets. The Dow closed May up just 0.04%, while the NASDAQ finished down 2.05%.

On the foreign exchanges, sterling closed the month at $1.26 against the US dollar. The euro closed at €1.17 against sterling and at $1.07 against the US dollar.

Brent Crude closed the month trading at around $118 a barrel, a gain of 9.31%. Gold is currently trading at around $1,854 a troy ounce, a loss of 3.19% on the month.

Inflation hits 40-year high

Official UK inflation statistics show consumer prices are now rising at the fastest rate in four decades driven by the sharp rise in energy bills.

Data released last month by the Office for National Statistics (ONS) revealed that the Consumer Prices Index 12-month rate – which compares prices in the current month with the same period a year earlier – rose to 9.0% in April. Although the figure was broadly in line with analysts’ expectations, it does represent a considerable jump from the previous month’s rate of 7.0%.

ONS said that around three quarters of the rise was due to higher electricity and gas bills following Ofgem’s price cap increase which was introduced at the beginning of the month. In addition, higher fuel and food prices driven up by the Ukraine war were also notable upward contributors to April’s figure.

Price pressures look set to continue building over the remainder of this year, with the BoE’s latest forecast suggesting inflation will average ‘slightly over 10%’ at its peak during the final quarter of 2022. The bulk of this anticipated further increase will be due to higher household energy bills from October as a result of the energy regulator’s next price cap review.

Job vacancies outpacing unemployment

Although the latest batch of employment statistics shows vacancies currently exceed the number of unemployed people in the UK, there are signs that the jobs market may be cooling a little.

Figures released last month by ONS showed the unemployment rate fell to 3.7% between January and March, its lowest level in almost 50 years. There was also another rise in vacancies which hit a fresh high of 1.3 million; as a result, the number of people out of work is now less than available job openings for the first time since records began.

The data also revealed that the number of people changing jobs hit a record high which ONS said was ‘driven by resignations rather than dismissals.’ Overall, however, ONS did say the latest release painted ‘a mixed picture’ with total employment, although up on the quarter, still below its pre-pandemic level.

Survey evidence also suggests the labour market may be starting to cool. The latest permanent staff placements index from KPMG and the Recruitment and Employment Confederation, for instance, fell to 59.8 in April. While any reading above 50 still implies growth, this was the fifth consecutive monthly decline and the lowest figure since March 2021.

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

FCA outlines plans to get people investing

The Financial Conduct Authority (FCA) has launched a new strategy to give consumers the confidence to invest, safe in the knowledge they are supported by a high-quality advice market; and to help them do so safely, which should lead to fewer people being scammed or investing in products that are too risky for their needs.

As part of the strategy the FCA is launching an awareness campaign to target people who may have invested for the first time during the pandemic, often into cryptocurrencies, mainly for the thrill of investing rather than for long-term savings goals or alignment to their needs.

The FCA is also concerned about the high numbers of people who could benefit from investment earnings but are missing out by keeping money in cash. Nearly 8.6 million people currently hold more than £10,000 of investible assets in cash. By 2025 the FCA intends to reduce by 20% the number of consumers who could benefit from investment earnings but are currently missing out. In addition, it intends to reduce the money consumers lose to investment scams (£570m in 2020-21, tripled since 2018).

Sarah Pritchard, FCA Director of Markets said, “We want to give consumers greater confidence to invest and to help them do so safely, understanding the level of risk. The package of measures we have announced today are intended to support that – we want people to have greater confidence to invest.”

The value of investments and income from them may go down. You may not get back the original amount invested.

Commercial Property Market Review – May 2022

Return to the office

According to a recent business update, London’s office-leasing market is kicking back into life after its pandemic-induced slumber, with modern and energy-efficient space most in demand.

Companies are willing to pay higher rents for leases than they were a year earlier, according to Derwent London, a FTSE 250 office landlord. The value of its new lettings have risen to £3.9m in the year to date, 8.2% above the estimated rental value in December.

With the rise in flexible working, however, office occupancy remains far below pre-pandemic levels. Nationwide, the figure is currently about 26%, according to Remit Consulting, a significant fall from 60% before the pandemic.

This low occupancy rate has allowed new tenants to focus on securing high-quality space. Occupiers’ requirements are narrower but more immutable, Derwent said, with modern, energy-efficient offices that contribute to lowering a company’s carbon emissions highly sought after.

Strong demand but caution endures

The commercial market gained momentum in Q1 2022, according to the latest Royal Institution of Chartered Surveyors UK Commercial Property Survey, with demand growth accelerating at the headline level for both occupiers and investors.

A net balance of +32% of respondents reported an increase in occupier demand at the all-sector level, the strongest reading since 2015. The office occupier market was a top performer in the quarter, increasing its net balance from -3% to +30%. Office occupier demand in the retail sector returned to -1%, following  level of -23% in Q4 2021.

Investor demand was strong too, with a net balance of +32% of respondents reporting an increase in buyer enquiries at the all-property level. Alongside a steady increase in the supply of leasable office and retail space, sustained demand has led to the all-property capital value expectations being revised higher for the coming year.

Despite these strong figures, however, many contributors remain cautious in the face of macroeconomic pressures. Rising living costs and higher interest rates are causing some to point to a growing sense of nervousness in the market.

Logistics quarterly round-up

Uptake of logistics space in Q1 2022 totalled 10.43m sq. ft, according to CBRE’s latest UK Logistics Market Summary, twice as high as the corresponding figure in 2021.

Correspondingly, the UK vacancy rate fell in the quarter and currently sits at 1.55%. Ready-to-occupy supply also dipped slightly on a quarterly basis, meaning it has now fallen 55% year-on-year.

This busy activity, however, is being matched by increased speculative activity. The total speculative under construction space at the end of the quarter was 14.97m sq. ft. Even though more than a third has already been taken, the year ahead should be busy, the report suggests.

Continuing the trend, nearly all UK regions experienced rental growth in the quarter, as UK prime rents recorded yet another new record. Driven by this strength, Q1 industrial and logistics investment volumes, although lower than Q4 2021’s record levels, have risen 19% year-on-year.

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Residential Property Review – May 2022

Three key Queen’s Speech commitments

Housing featured prominently in the Queen’s Speech on 10 May, with social housing, rental reform and leasehold reform all part of the government’s priorities in the coming twelve months.

Of the 38 legislative announcements, there were three significant ones relating to housing: the Social Housing Regulation Bill, the Renters’ Reform Bill and the Leasehold Reform (Ground Rent) Act.

First, the Social Housing Regulation Bill promises to give tenants more rights with regards to the quality and safety of their homes. Five years after the Grenfell Tower tragedy, the proposed legislation will give more power to the regulator to inspect homes, order emergency repairs, issue limitless fines and intervene in badly managed organisations.

Standing in for his mother, Prince Charles affirmed the government’s commitment to “improve the regulation of social housing, strengthen the rights of tenants and ensure better quality safer homes.”

Second, the Renters’ Reform Bill promises to abolish Section 21 evictions and strengthen landlords’ rights of possession. A Section 21 notice, commonly known as a ‘no-fault eviction’, gives tenants just two months to move out – without the landlord having to give any reason for the eviction.

The Bill is expected to include widespread reforms to the private rented sector, including a national register of landlords. For now, however, details remain scarce; the government is expected to produce a White Paper later this year.

Third, the Leasehold Reform (Ground Rent) Act 2022 is the most advanced proposal, with the legislation set to come into force on 30 June 2022.

The Act will end ground rents for new, qualifying long residential leasehold properties in England and Wales by limiting the lease to no more than ‘one peppercorn per year’. It will also ban freeholders from charging administration fees for collecting this peppercorn rent.

Housing market still resilient in face of inflation worries

Affordability concerns are not yet holding back activity in the residential market, the latest figures show, even if the rising cost of living could forewarn leaner times ahead.

Total transactions in March reached 111,000, 12% above 2017-19 levels for the month, according to Savills. Meanwhile, sales agreed remained 18% higher than pre-pandemic levels in April, according to TwentyCi, which should translate into strong sales for the next few months.

Alongside this persistent demand, there are some signs of increased supply. The number of homes on the market has increased in each of the first three months of 2022. This re-balancing of supply and demand could take some heat out of the market, experts suggest.

Moreover, inflationary pressures are adding to affordability concerns, with lenders now expecting lower availability of mortgages in Q2 2022, according to a Bank of England (BoE) survey. Indeed, the BoE’s own decision to raise Bank Rate to 1.0%, the fourth such rise in six months, could further erode mortgage affordability.

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Up close and personal with your mortgage rate

Do you know if you could benefit from remortgaging? If not, the first step is to compare your current interest rate to those currently available on the market.

Several surveys over recent years have shown that a substantial minority of people have no idea what their mortgage interest rate actually is.

Interest rates on the rise

If you’re unsure about your mortgage interest rate, now is the time to find out, with Base Rate on the rise. If you currently have a tracker or discount mortgage, or are on your lender’s Standard Variable Rate, it’s likely you’re already feeling the impact on your bank account. So, now would be a good time to lock into a fixed rate deal before interest rates rise any further.

All knowing

Understanding your current financial situation is the first step towards improving it. Don’t stick your head in the sand – we can help you to assess your current mortgage rates, and whether more favourable options are out there. Please get in touch to find out whether you could save on your mortgage.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Pensioners sitting on cash ISAs

An alarming set of data has come to light. Over three million pensioners are holding all of their ISA savings in cash!1

The analysis highlighted that during the most recent year for which figures were available (2018/19), there were 5.8 million over-65s holding ISAs, valued at just over £305bn in total, the average amount held was £52,500. However, 3.4 million of these were holding an average of £25,383 exclusively in cash ISAs, with a total amount of £87bn sat in these vehicles.

With very few of these 3.4 million pensioners likely to be earning interest of more than 1%, and many considerably less, former Pensions Minister Steve Webb commented, “Whilst holding small amounts of cash in an easy access account can be convenient, these figures show that huge amounts of money are sitting rotting in cash ISAs. Inflation is like a tax on savers. With inflation soaring, the spending power of cash savings is being savagely reduced. Many instant access cash ISAs pay little or no interest and runaway inflation will take a huge chunk out of the value of these savings.”

He continued, “Older savers need to consider urgently whether keeping their money in these cash accounts is the best way to protect their hard-earned savings, especially when the real value of their State Pension is also being squeezed.”

1CP, Freedom of Information, 2022

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.