Ros Altmann: It's time to stand up for responsible savers

Who is going to stand up for responsible savers and who is going to save our pensions?

The economic crisis resulted from too much debt and not enough saving – but short-sighted policy is repeating the same errors by attempting to undermine savers and damaging pensions. This will not solve our problems and, with an ageing population, damaging pensions just means that more people will end up in poverty, fall back on benefits or be forced to take more risks with their money that could wipe out their capital.

Here are the reasons Mr Bean is wrong:

The Bank of England does not want people to save: Mr Bean dismisses the concerns of savers and argues that it is more important to encourage people to spend, so the Bank of England is happy to see people's savings suffer. Mr Bean believes they should be expected to eat into their capital and not expect to be able to live on the income from their savings.

Pension funds have been decimated by low rates: This misguided policy has ignored the perils of low rates for pensions. Pension liabilities have soared, while annuity rates have plunged, which means people's pensions have been decimated. In an ageing population, such policies are dangerously short-sighted.

The Bank of England has also failed to control inflation, damaging savers further: Savers have not only been hit by near-zero interest rates but have also been damaged by high inflation, which has consistently exceeded the Bank of England's target.

Indeed, while policy rates have been kept at 0.5 per cent, inflation is nearly 5 per cent on the RPI measure and still over 3 per cent on CPI, which means savers have suffered falling capital in real terms, as well as seeing their savings income disappear.

The Bank of England undermines Government claims to want to reinvigorate pensions: Mr Bean's comments undermine the coalition Government's claims to want to rebuild our savings culture and reinvigorate pensions and retirement.

By punishing those who did save for their future, the Bank of England's policy will also damage the long-term growth prospects of our economy and ensure a miserable old age for too many people.

If baby-boomers who saved still have inadequate pensions, the economy will decline: Destroying savings incentives and undermining pensions just when the ageing population is coming through to retirement is a recipe for long-term economic decline – storing up further problems for the economy in future. By damaging pensions, savings and pensioners, everyone loses.

Short-sighted policy is very dangerous: The Bank of England needs to urgently re-examine its short-sighted policy stance. Growth at all costs is not a recipe for long-term success, indeed, isn't that how we got into the crisis in the first place?

Central banks kept interest rates too low for too long, encouraged too much borrowing, facilitated financial speculation and led people to believe we could all live beyond our means without worrying about the future consequences. It may make people feel a bit better for a while to keep spending and not saving, but this will lead to an even worse crisis in future.

We must not destroy savings incentives, or punish savers for

being prudent: Of course, businesses need to spend, but households

should be encouraged to pay back debt and build up reserves to sustain them in older age, not to keep spending like there is no tomorrow. Otherwise, millions of people face very miserable tomorrows.

Penalising savers and damaging pensions to help borrowers and bankers is unfair: We will not get strong growth if the older generation's pensions are decimated. If the Bank of England creates inflation to help devalue debts, then a generation of savers and those who did put aside money for future pensions will be damaged, which will cause future generations to mistrust savings. Not only will this lead to economic decline in the long-term, it also flies in the face of fairness, undermines pensions, discourages saving and leads to misery for millions.

The problem is that banks are profiteering to shore up their balance sheets: Record low interest rates have not translated into strong growth because banks have rebuilt profits and margins, rather than passing on low rates to their customers.

Sustainable growth requires investment, which means businesses borrowing at reasonable rates, not being denied credit or being charged extortionate fees for their loans.

Ros Altmann is a former government pensions adviser and the new director-general of Saga.