Pensioners suffering most in downturn

Compared with four years ago, costs have risen by 14.4 per cent for the population as a whole but are up by 18.5 per cent in the 50 to 64 age group, by 20 per cent among 65 to 74-year-olds and by 20.2 per cent for those aged 75 and over, Saga’s figures showed.

The over-50s lobby group said rising gas and electricity prices have disproportionately increased inflation rates for older people.

Saga director general Ros Altmann added that anyone who has bought an annuity, which pays out a fixed income for the rest of their life, was seeing their buying power eroded month after month.

She added: “Continuing to allow inflation to silently steal older people’s assets is not a recipe for economic recovery.”

Patrick Bloomfield, a partner at pensions adviser Hymans Robertson, said pensioners will also feel aggrieved at the Government’s decision to use the CPI (consumer prices index) measure of inflation to determine future benefits.

He added: “With CPI 0.4 per cent lower than RPI (retail price index), a 60-year-old retiring today on an annual pension of £10,000 would receive £30,000 less over their lifetime if that gap is maintained.”

However, with inflation running above 5 per cent he said many pensioners were still set for an improvement in their circumstances next year. Comparison website Moneyfacts said to beat inflation, a basic rate taxpayer at 20 per cent needs to find a savings account paying 6.5 per cent.