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| 'We need interest to pay bills' | 'We need interest to pay bills' |
| (40 minutes later) | |
| Thousands of people relying on savings to top up their pension income have been affected by recent reductions in the interest rates paid by banks. | Thousands of people relying on savings to top up their pension income have been affected by recent reductions in the interest rates paid by banks. |
| Two BBC News website readers discuss their situations ahead of a Bank of England announcement which could see rates fall even further. | Two BBC News website readers discuss their situations ahead of a Bank of England announcement which could see rates fall even further. |
| JOE ROUTLEDGE, LONDON | JOE ROUTLEDGE, LONDON |
| Among the many pensioners to have suffered as a result of plummeting interest rates is Joe Routledge. | Among the many pensioners to have suffered as a result of plummeting interest rates is Joe Routledge. |
| "We really need the interest on our savings to pay bills," said the 77-year-old. | "We really need the interest on our savings to pay bills," said the 77-year-old. |
| "It pays the £300 to £400 for our car insurance, as well as things like electricity." | "It pays the £300 to £400 for our car insurance, as well as things like electricity." |
| He and wife Veda, 63, a former children's home worker, have been forced to shift around the £15,000 they had squirreled away, as they search for better rates. | He and wife Veda, 63, a former children's home worker, have been forced to shift around the £15,000 they had squirreled away, as they search for better rates. |
| When told in November that the £5,000 they had in two Barclays ISAs was reaping just 1.7%, compared to the 5% or so they were used to, the couple moved the cash to a one-year bond with the Halifax paying 3.75%. | When told in November that the £5,000 they had in two Barclays ISAs was reaping just 1.7%, compared to the 5% or so they were used to, the couple moved the cash to a one-year bond with the Halifax paying 3.75%. |
| "There was no way I was going to leave that much money in an account like that, there was no point," Mr Routledge said. | "There was no way I was going to leave that much money in an account like that, there was no point," Mr Routledge said. |
| "The problem now is that the money is tied up for a year, so we can't get at it when we need to pay our bills. | "The problem now is that the money is tied up for a year, so we can't get at it when we need to pay our bills. |
| "We will just have to economise and cut down on food expenses by shopping around," he said. We've got storage heaters in the hall but we can't afford to burn them all the time | "We will just have to economise and cut down on food expenses by shopping around," he said. We've got storage heaters in the hall but we can't afford to burn them all the time |
| Mr Routledge said he was luckier than many. | Mr Routledge said he was luckier than many. |
| The couple's west London home is subject to registered rent, preventing the landlord from increasing charges beyond what the local authority deems is "fair". | The couple's west London home is subject to registered rent, preventing the landlord from increasing charges beyond what the local authority deems is "fair". |
| Since a heart complaint forced him to take early retirement from his job with BOC, Mr Routledge has received a company pension - now £96 a month - on top of the couple's combined weekly state pensions totalling £150. | Since a heart complaint forced him to take early retirement from his job with BOC, Mr Routledge has received a company pension - now £96 a month - on top of the couple's combined weekly state pensions totalling £150. |
| They receive housing and council tax benefit but lose out on the full amount because of the very savings they put aside to fund their retirement. | They receive housing and council tax benefit but lose out on the full amount because of the very savings they put aside to fund their retirement. |
| A couple with less than £16,000 in the bank qualify for the benefits and can hold £6,000 in savings without affecting their payments. | A couple with less than £16,000 in the bank qualify for the benefits and can hold £6,000 in savings without affecting their payments. |
| But for every £500 they have saved over that amount, the authorities assume they earn £1 per week in "tariff income" and reduce the benefit payments accordingly. | But for every £500 they have saved over that amount, the authorities assume they earn £1 per week in "tariff income" and reduce the benefit payments accordingly. |
| Slashed income | Slashed income |
| The Routledges' tariff income is calculated at £18 per week, or £936 per year. | The Routledges' tariff income is calculated at £18 per week, or £936 per year. |
| But with their interest payments falling well short of covering this, Mr Routledge said it has effectively left them hundreds of pounds a year worse off. | But with their interest payments falling well short of covering this, Mr Routledge said it has effectively left them hundreds of pounds a year worse off. |
| "The biggest problems are gas and electricity prices. We've got storage heaters in the hall but we can't afford to burn them all the time," he said. | "The biggest problems are gas and electricity prices. We've got storage heaters in the hall but we can't afford to burn them all the time," he said. |
| "Because of my heart condition I don't drink much but I do like to have a pint. I'll be lucky if I can get to the pub twice a week now." | "Because of my heart condition I don't drink much but I do like to have a pint. I'll be lucky if I can get to the pub twice a week now." |
| JOHN BOUTCHER, ESSEX | JOHN BOUTCHER, ESSEX |
| John Boutcher, 62, from Basildon, is living off a £200-a-month pension and the interest on his savings of about £100,000. | John Boutcher, 62, from Basildon, is living off a £200-a-month pension and the interest on his savings of about £100,000. |
| "I don't have a mortgage and so it may sound like I have a lot of money in the bank but I still have bills to pay - electricity, council tax," he said. | "I don't have a mortgage and so it may sound like I have a lot of money in the bank but I still have bills to pay - electricity, council tax," he said. |
| "With interest rate cuts, the main source of my income is being taken away." | "With interest rate cuts, the main source of my income is being taken away." |
| I'm not entitled to anything from the state because of the level of my savings | I'm not entitled to anything from the state because of the level of my savings |
| Mr Boutcher said if he earned little interest, his savings could eventually disappear. | |
| The retired debt agency worker found himself with money to invest after selling his house and moving into a smaller property when his wife died. | The retired debt agency worker found himself with money to invest after selling his house and moving into a smaller property when his wife died. |
| "I'm not entitled to pension credit," he said. | "I'm not entitled to pension credit," he said. |
| "I'm not entitled to anything from the state because of the level of my savings." | "I'm not entitled to anything from the state because of the level of my savings." |
| Mr Boutcher initially placed all his money in a single savings account but in the wake of the collapse of Northern Rock bank, he read about potential limitations to compensation. | Mr Boutcher initially placed all his money in a single savings account but in the wake of the collapse of Northern Rock bank, he read about potential limitations to compensation. |
| "I took advice about spreading the risk and moved the money into £35,000 lump sums and put it in different accounts," he said. | "I took advice about spreading the risk and moved the money into £35,000 lump sums and put it in different accounts," he said. |
| Government help? | Government help? |
| Mr Boutcher's money is currently invested in fixed term savings bonds and earning 5.5% to 7% a year in interest. | Mr Boutcher's money is currently invested in fixed term savings bonds and earning 5.5% to 7% a year in interest. |
| But the accounts are all set to mature in 2009 leaving Mr Boutcher with a future problem he worries about. | But the accounts are all set to mature in 2009 leaving Mr Boutcher with a future problem he worries about. |
| The rate reductions in recent months mean many saving accounts are already paying less than 2%. | The rate reductions in recent months mean many saving accounts are already paying less than 2%. |
| Mr Boutcher believes the income he currently earns from interest could therefore fall to less than £3,000 a year. | Mr Boutcher believes the income he currently earns from interest could therefore fall to less than £3,000 a year. |
| "When my money matures, where do I invest?" he said. | "When my money matures, where do I invest?" he said. |
| "As each bond matures I'm left not knowing where to put it to give me an income." | "As each bond matures I'm left not knowing where to put it to give me an income." |
| Mr Boutcher's income will be boosted when he is able to claim his state pension, but that is still a little over two years' away. | Mr Boutcher's income will be boosted when he is able to claim his state pension, but that is still a little over two years' away. |
| Ahead of the budget, the government has said it is looking at measures to help savers. | Ahead of the budget, the government has said it is looking at measures to help savers. |
| Mr Boutcher believes more should be done to help people in his situation. | Mr Boutcher believes more should be done to help people in his situation. |
| "Lowering mortgage rates without any provision for savers, particularly the over 50s, seems to be the finance of madness," he said. | "Lowering mortgage rates without any provision for savers, particularly the over 50s, seems to be the finance of madness," he said. |
| "Mr Brown says it's OK to spend your money but will they look after me if it's gone?" | "Mr Brown says it's OK to spend your money but will they look after me if it's gone?" |