JAMES CONEY: Despite end of pernicious Funding for Lending scheme the incomes of many savers will never recover

Updated: 05:57 EST, 4 December 2013

e-mail

Money down the drain: Pensioners can't simply put more into their savings as the capital that has been spent thanks to lower interest rates cannot be replaced

Finally, savers may be able to see the end of the low-rate misery.

Our improving economy, which has boosted employment, could mean that interest rates rise from their historic low of 0.5 per cent within a couple of years.

And more imminent is the end of the Government’s dastardly Funding for Lending scheme. In the short 15 months this has been in place savings rates have been brutally slashed.

Average two-year bond rates plunged from 3.17 per cent to 2.01 per cent while one-year Isas fell from 2.63 per cent to 1.61 per cent.

And more savage has been the cuts to closed deals — around 3,000 so far this year.

The particularly harsh blow was that savers who had learned to survive on lower incomes following the cuts to base rate were unprepared for the new attack on their nest eggs.

Within weeks of the scheme being launched we began receiving painful letters from readers who had now started to deplete the capital they had spent years building up. Sadly, the relief at the prospect of the end of low rates will not be the end of the misery. The incomes of many will never recover.

Pensioners can’t simply put more into their savings. The capital that has been spent cannot be replaced.

Another big question looms over how the new governor of the Bank of England, Mark Carney, plans to undo quantitative easing. This is the policy of effectively printing more money that has cut the payouts on pension annuities.

Again, such is the harshness of our country’s pension rules, that those who have had to lock into low incomes will never be able to get higher payments.

What I can promise you is that as the economy improves for savers we will be monitoring the financial institutions offering the best interest and annuity payouts.

We’ve kept a close eye on how they behaved when rates went down to ensure that, when interest goes up, savers are finally given a fair deal.

Mystery caller

I keep getting a very odd phone call at home.

The person ringing says: ‘We’re just checking to see if you have had your delivery of a local paper.’

Naturally I’m suspicious. So on the previous three occasions have tried to glean more information.

‘Which paper?’, ‘Who is calling?’, ‘Why do you need to know?’

The slightly flustered response is always: ‘I’m just calling to check whether you have received your paper.’ No more information is ever forthcoming, and on further questioning they always hang up. The phone call can’t be traced.

It must be a scam — but for what? What I find particularly odd is that the caller is always so flummoxed and uncertain. Scam artists are usually so well drilled.

I’m so intrigued that I actually look forward to the next call. So if anyone has any ideas how I can crack this mystery, I’d love to hear them.

EastEnder tips

The good folk of Walford on EastEnders seem to know an awful lot about screaming at each other in pubs, love triangles and market trading.

But based on this Monday’s episode they also know the best place to go for personal finance news — Money Mail, of course.

Soapbox: Money Mail Editor James Coney is columnist of choice in the Branning household.

Soap star Max Branning was so engrossed by our section while eating his breakfast he could barely spare a moment to talk to his daughter.

The article that grabbed his attention was our recent renewed call for the Chancellor to allow child trust funds to be merged in to Junior Isas.

So there you have it Mr Osborne — it’s not just families, Money Mail and major companies which think change is needed, but fictional TV characters, too!

Thursday’s autumn statement is the chance to make it happen and encourage a new generation of savers. As the locals at the Queen Vic might say: ‘You know it makes sense.’