Savers could ‘benefit’ from rising interest rates – review your savings now | Personal finance | Finance
Retirement saving is a long-term business, but there has been some volatility in recent months and years. The most recent change is the Bank of England’s decision to raise interest rates to 1%.
The central bank’s fourth consecutive hike has spooked some, especially with inflation expected to climb to 10%.
With the retirement years fast approaching or having arrived for many, what does rising interest mean for pensions?
Express.co.uk spoke exclusively with Karen Barrett, CEO and Founder of Unbiased, who gave clear insights into what rising interest rates can mean for pensioners and savers.
Ms Barrett said: “Those looking to take out an annuity could benefit from a higher interest rate.
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The option has been less popular recently as people turn to direct debit, which keeps pension money invested.
However, with the potential for rates to increase, some people may feel that this suits them better.
Ms Barrett also looked at where pension funds are invested and how rising interest rates can impact that.
She added: “A part of many pension funds is invested in bonds.
“The value of bonds could rise if interest rates rise.”
Unfortunately, the current climate of soaring inflation and rising interest rates is likely to create uncertainty among Britons.
However, for those who have their money invested, in pensions for example, it is important not to panic.
Indeed, hasty decisions can end up costing people money in the long run.
It will therefore be important to have a measured approach to financial management, especially when thinking about retirement.
Whatever decision a person makes with their pension can be a complex time.
Therefore, many people could benefit from seeking financial advice.
Ms Barrett stressed that this is particularly important given the current climate of rising inflation and interest rates.
She concluded: “A retirement pot is one of the most important forms of savings anyone has.
“It’s very important to get the right financial advice before you dabble in it.”