Pension savers urged to 'lock in' high interest accounts before likely rate cut next month
Older savers are being told "lock in" accounts with high interest rates
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Pension savers are being urged to "lock in" high interest rates and boost their retirement savings before the Bank of England likely cuts the base rate later this year.
Earlier today, the central bank's Monetary Policy Committee (MPC) confirmed the UK's base rate would be held once again at a 16-year high of 5.25 per cent.
Since December 2021, savings rates have been bolstered by high street banks and building societies passing on the Bank's rate hike to customers.
Experts are calling on Britons they are paying into pension savings which offer a competitive return and generous retirement boost ahead of the Bank slashing rates as soon as next month.
Despite voting seven-to-two for another hold, the MPC signalled the base rate could come down as soon as August with three policymakers citing their vote as "finely balanced".
While this would offer relief to mortgage holders and other debt borrowers, returns on savings accounts will be likely be slashed significantly.
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Experts are revealing how savings interest rates are on the rise GETTY Those preparing for retirement are being reminded of how this period of competitive rates could lead to generous returns once someone reaches pension age.
Lily Megson, policy director at My Pension Expert, highlighted the public scrutiny the Bank of England will likely face when it comes to future changes to the base rate.
She explained: “Could today’s hold be the last? It seems likely.
"Inflation is finally back at target levels after three long years, and the next time the Bank of England meets to decide on interest rates, the dust will have settled on the general election.
"Certainly, come August 1, the Bank will be under intense pressure to start bringing interest rates down and ease the burden on Britons’ finances.
However, the retirement expert highlighted how pensioners can use the Bank of England's base rate decision-making to their own advantage.
Megson added: "But before that happens, savers would be wise to consider how peak interest rates could benefit them in achieving their financial goals.
"For retirement planners, for instance, locking in favourable rates on fixed-term products like annuities and bonds could give their savings a welcome boost.
"Ultimately, as we prepare for interest rates to fall in the second half of 2024, it would be prudent for those looking to fully understand how economic policy impacts their finances to seek independent financial advice.”
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The Bank of England base rate has held interest rates at a 16-year high since it was hiked to 5.25 per cent last August GB NEWSMoneyfactscompare noted that interest rates on savings products have been volatile in recent months despite the consistency of the MPC's voting record.
According to the personal financial comparison website, the average easy access rate was 3.12 per cent at the start of June which is a slight rise from 3.11% per cent in early May. However, this was down from 3.18 per cent at the start of December,
Furthermore, the average easy access IS rate is currently 3.13 per cent which is the same level it was at in May but down from the 3.18 per cent recorded in December 2023.
The Bank of England's MPC will next announce a decision on the base rate on August 1, 2024.