The most obvious beneficiaries of George Osborne’s savings package are pensioners. They now can buy government bonds with an interest rate of 2.8% for an annual bond and an annual rate of 4% for a three year bond, making up for how low the Bank of England base rate is.
But it is not just pensioners who benefit. The fact that people no longer have to buy an annuity will benefit those coming up to retirement most. Those planning for retirement know that they now have far more flexibility about how they structure their retirement. While increasing the ISA limit to £15,000 helps those trying to save up a deposit for a house or a flat.
These changes also mean that Osborne can have his cake and eat it when it comes to interest rates. He can tell mortgage holders that it is thanks to the government’s fiscal policy that the Bank of England have been able to keep interest rates so low while pointing silver savers to the higher interest rates that the government is making available to them.Tags: Budget 2014, George Osborne, Interest rates, Pensions