The recent series of interest rate reductions is bad news for savers. The obvious losers tend to be older people, and especially pensioners, many of whom depend upon the income from their savings to supplement their pensions.

But actually we will all suffer the effects of the Bank of England's help to industry. Annuity rates have been steadily falling, so that pensions cost more to provide, at the same time as the returns on pension investments are falling. We will need to fill a larger pot, but what we put in will grow more slowly.

If you add to this combination the fact that we all expect to live longer and hope to retire earlier, clearly the pension fund has to spread even more thinly.

The State Pension alone cannot provide an adequate income for future pensioners. This means that we are all going to have to put aside more for our old age.

Only those with inflation-proofed pensions can be so confident of not being hit by interest rates in, say, 20 years time.

Chris Wontner-Smith is a business adviser partner at Grant Thornton in Bradford.

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