Kuni Lingston
Millions of UK residents aged 60 and above are being urged to take immediate action to protect and grow their savings.
With the ongoing cost of living crisis, rising inflation, and decreasing interest rates, older households are at serious risk of losing out on both missed entitlements and poor financial decisions.
From unclaimed government benefits to underperforming savings accounts and pension mistakes, now is the time to take control of your money.
Why Are Over-60s Being Urged to Act Now?
There’s been a sharp increase in financial pressures on retirees, and many people over 60 are unknowingly leaving money on the table. Financial experts are urging this group to:
- Claim overlooked benefits like Pension Credit
- Avoid pension traps such as the Money Purchase Annual Allowance (MPAA)
- Move savings from low-interest accounts to higher-yield options
What Are the Common Financial Mistakes?
Let’s break down the common issues that can lead to lost income or savings:
| Mistake | Impact |
|---|---|
| Not claiming Pension Credit or State Pension | Loss of £1,000s in yearly income |
| Withdrawing pension while still contributing | MPAA reduces tax-free allowance from £40,000 to £4,000 |
| Leaving savings in low-interest accounts | Interest rates <1% can’t keep up with inflation |
| Not locking into fixed-rate savings accounts | Missing out on rates as high as 4.5% before they drop |
Understanding the MPAA Rule
Once someone taps into their defined contribution pension via flexible access, such as income drawdown or lump sums, they may trigger the Money Purchase Annual Allowance (MPAA).
This slashes their annual tax-free pension contribution allowance from £40,000 to £4,000, limiting future retirement savings.
This rule impacts thousands of people who unknowingly withdraw pension funds early, thinking they are simply accessing what is theirs.
Missed Benefits and Unclaimed Entitlements
Over-60s often forget to check eligibility for state-supported income, including:
- Pension Credit, which boosts retirement income for those with low savings
- Attendance Allowance for help with personal care
- Winter Fuel Payments for heating costs
Failure to claim these benefits could mean losing out on thousands annually. Reviewing eligibility and filing promptly could add significant monthly income.
How Savings Accounts Are Failing You
Most traditional bank accounts are offering less than 1% interest, which is far below inflation. Savvy savers are being encouraged to move funds to accounts offering:
- Easy-access rates as high as 4.98%
- Fixed-rate savings bonds offering up to 4.58%
- ISAs with guaranteed interest and tax-free growth
With the expectation of further interest rate cuts later this year, locking in these high rates now can preserve value long term.
Best Options for Over-60s in 2025
| Option | Potential Return | Suitable For |
|---|---|---|
| High-street savings accounts | < 1% | Emergency fund only |
| Online easy-access accounts | Up to 4.98% | Flexible, short-term savings |
| Fixed-rate ISAs & Bonds | Up to 4.58% | Medium to long-term savings |
| Pension contribution (pre-MPAA) | Up to £40,000/year | Ongoing retirement planning |
| Pension contribution (post-MPAA) | Max £4,000/year | Limited contribution allowance |
What You Should Do Today
- Review your bank statements and savings interest rates
- Claim all benefits you qualify for — even if you think you don’t
- Avoid early pension withdrawals unless absolutely necessary
- Compare savings platforms for best interest rates
- Consider locking into fixed-rate deals before rates drop
Why Acting Early Pays Off
If you delay, you risk:
- Losing out on interest
- Missing limited-time offers
- Shrinking your retirement funds
- Triggering pension limits
Simple changes—like moving money from a <1% account to a 4.5% one—can generate hundreds or even thousands more per year.
If you’re over 60 and living in the UK, this is your reminder to take control of your finances. The money you’ve worked hard to save could be underperforming or at risk due to simple oversights.
From pension planning to claiming what you’re owed and choosing the right savings accounts, small, informed steps today can protect and grow your financial well-being for years to come.
FAQs
Will withdrawing from my pension reduce my contribution limits?
Yes, it can. Activating your pension early through flexible withdrawals could reduce your annual tax-free pension contributions from £40,000 to £4,000.
How can I find a savings account with higher interest?
Compare banks and savings platforms online. Look specifically for easy-access or fixed-rate bonds with interest rates above 4%.
Is Pension Credit only for very low-income people?
Not always. Even modest savings or pensions might still qualify you for top-up income, so it’s worth checking.