Older savers will soon have more choice in what products to go for, after Saga revealed that it is preparing to launch a range of savings products for the over-50s as part of a tie-up with NatWest.
The over-50s specialist gave an update about its seven-year partnership with NatWest Boxed last week, which will see it deliver “innovative” savings accounts for older people.
Saga says the savings range “recognises, and caters for, the distinct needs and preferences of people over 50”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The first product to launch will be an easy-access account, which MoneyWeek understands could be in October.
According to Jerry Toher, CEO of Saga Money, the new savings accounts will “further strengthen our position in providing competitive and flexible savings products, ensuring that Saga remains the most-trusted brand for people over 50 in the UK”.
We look at what Saga is offering, and which savings accounts aimed at older people are already on the market.
What do we know about Saga’s new savings products?
Saga already offers products including cruises, holidays, equity release, insurance for older people, and a cash ISA (provided by Goldman Sachs International Bank).
The new easy-access savings account will replace Saga’s existing instant-access savings product, which is open to everyone aged 18 and over and provided by Goldman Sachs.
There will be no change for existing customers who already hold a Saga instant-access savings product, with the Goldman Sachs contract continuing until it expires in September 2028.
It is not clear yet what features or interest rate the new instant-access account will have. It’s also not known what sort of savings products will be launched in future by Saga and NatWest Boxed, which is NatWest’s banking service division that supplies financial products to non-bank third-party providers.
NatWest Boxed says the partnership will deliver “easy-to-use products and services, while also featuring accessible and reliable customer service”.
It adds that the tie-up will enable Saga to “expand its range of financial services, initially through an improved savings proposition, with other financial services products expected to be added in due course”.
Savings accounts for the over-50s
There has been a decline in the number of age-restricted savings accounts for those aged 50 and over during the past decade.
There are currently four on offer today, down from six in 2020, and 12 in 2015, according to Moneyfactscompare.co.uk analysis for MoneyWeek.
Interestingly, 10 years ago Saga did offer a “Telephone Saver” account to those aged 50 and above, which paid 1.35% interest and was available as a monthly interest or annual interest account.
Today, the four savings accounts are provided by a trio of building societies: Chorley, Earl Shilton and Newbury. They have minimum ages of 50, 55 and 60.
It’s important to point out that older savers can typically choose any standard savings account aimed at adults that they wish. But there are also a few products with a minimum age of 50 or above that they can look at too.
Swipe to scroll horizontally
Savings provider
Account
Minimum age
Interest rate (%)
Interest paid
Chorley Building Society
Over 60’s Account Issue 3
60 Years
2.1
Yearly
Earl Shilton BS
Heritage Account (0-4 withdrawals per year)
50 Years
3.5
Yearly
Earl Shilton BS
Heritage Account (5+ withdrawals per year)
50 Years
1
Yearly
Newbury BS
Senior Saver
55 Years
3.2
Monthly
Source: Moneyfactscompare.co.uk
How do the over-50 savings accounts compare to the wider market?
The interest rates on offer aren’t particularly competitive. Earl Shilton offers the highest rate, at 3.5%, but you can only make up to four withdrawals a year.
In comparison, the best easy-accounts are currently paying above 4.5%.
In fact, none of the over-50s savings accounts are keeping pace with inflation, which is currently running at 3.6%. This means the value of your money is being eroded in real terms.
Chorley pays just 2.1% to those aged 60 and over, while if you make five or more withdrawals on the Earl Shilton account, the interest rate falls to a measly 1%.
Aside from the interest rate, what features do these accounts have, and why might they be suitable for an older saver?
Well, all four have branch access, which can be desirable for older people. In contrast, most of the best savings rates are offered by challenger banks that only offer internet access (or even just through an app). There are no branches where you can pop in and speak to someone.
All the over-50s savings accounts also have postal access, while two have internet access (Chorley and Newbury). There may also be the option for monthly interest, which can be useful for retirees topping up their pension income. Newbury offers monthly interest on its Senior Saver account.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, comments: “Older savers might prefer to manage their finances in branch for accessibility reasons. A survey from Yorkshire Building Society highlighted demand for branches; it found a quarter of consumers still visit their local branch at least once a month and that a fifth of those questioned preferred an in-branch service for their day-to-day banking needs.”
She adds that there aren’t really many accounts which are exclusive to older savers, so customers who have one of these accounts do need to shop around to ensure they are not getting a raw deal.
However, make sure you don’t fall into the trap of thinking that an age-restricted account will pay you a higher interest rate, or even a competitive one.
If branch access is important to you, check out Coventry Building Society’s Access Saver that pays 4.5%. It can be opened and managed in-branch (as well as online, by post or over the phone).
Up to four withdrawals per year are allowed, and there’s the option to receive monthly interest. There’s no minimum or maximum age.
