Senior doctors with substantial savings now face a further blow following news that National Savings & Investments (NS&I) has cut the total value of prize money paid to Premium Bond investors.
The ‘prize rate’ has dropped from 1.5 per cent of the total invested to 1.3 per cent. Also, the odds of each £1 Bond number winning a prize have reduced to 26,000 to one from 24,000 to one.
At the same time, Mark Carney, the new governor of the Bank of England, stated the bank will not raise its interest rates from the current record low of 0.5 per cent until UK unemployment falls to 7 per cent. It currently stands at 7.8 per cent and is not expected to reach the lower level until at least 2016.
Inflation, as measured by the Consumer Prices Index, is running at 2.7 per cent so a higher rate taxpayer would need to find an account paying at least 4.5 per cent to beat the increase in the cost of living.
Mark Carney said savers will be content with the broader concept of the interest rate freeze because ‘they care about their children and grandchildren, that they have jobs and bright futures’. In reality, this will provide little comfort to those who have worked very hard for their money for a long time, sensibly saving for retirement as they did so.