Pensioners face fresh hit as banks prepare to slash savings rates

Retirees face another blow as a result of market downturns in the wake of Donald Trump’s tariffs.

Telegraph readers said as much as £120,000 had been wiped from the value of their pensions amid market chaos, but it is not just retirement pots that are affected.

The rates available on cash Isas, the bedrock of much of Britain’s savings, will drop as the Bank of England hurries to cut the Bank Rate, experts said.

Swap rates, which determine what the banks offer their customers on savings and mortgages, have fallen consistently since the US president’s so-called “Liberation Day” on April 2.

Before the introduction of tariffs, the markets were pricing in two Bank Rate cuts this year – but as many as four are now expected before the end of 2025.

Retirees are more likely to keep their savings in cash, as they have less time to ride out any market turbulence, as is currently being experienced.

James Blower, of the Savings Guru, said: “The turmoil from the Trump tariffs has moved us in the direction of sub-4pc Bank Rate come the end of 2025.

“This will not be good news for savers and, if we were to see a Bank Rate of 3.75pc by the year end, then we can expect to see best buy easy access rates and one-year fixed rates fall below 4pc.”

Mr Blower added: “This [high rates] will come to an end soon and I expect that the high rates over the past week or so have been a last hurrah at acquiring customers during peak Isa season.”

‘The mental anguish is too much’

One recent pensioner, Jonny, said that he and his wife had decided to move their money from a stocks and shares Isa into a cash account for peace of mind.

He said: “Every January our financial adviser showed us the same dull charts and repeated the same mantra that in the long run our investment would pay off.

“In March we took the decision that we were sick of watching the FTSE go up and down. When it went up our investments never seemed to go up but when the FTSE went down we always seemed to lose money. The mental anguish was getting too much.”

Dennis Reed, director of Silver Voices, previously told The Telegraph: “A lot of older people don’t trust stocks and shares – quite rightly, as there can always be a crash.

“With cash, the only thing you have got to contend with is inflation, and the interest on it will compensate for some of that.”

‘Savings rates across the board will edge down’

Sarah Coles, of investment platform Hargreaves Lansdown, said: “We have already seen some movement, especially in the easy access market, where 5pc is vanishingly rare and comes with serious strings attached.

“This is unlikely to be the end of it. We’re likely to see savings rates slowly edging down across the board, as each bank raises the cash it needs, and then cuts rates so as not to pay too much for additional money.”

Ms Coles said that in regards to the market downturn, savers should take into account their personal goals before making any big decisions.

She said: “Make the most of things as they stand right now, rather than trying to second-guess what mood will be driving the US administration tomorrow.”

The market crash comes just days after Rachel Reeves confirmed to the Treasury Select Committee that she would make changes to the Isa regime.

The Chancellor said that “reform would be worthwhile” when asked about rumours she is planning to cut the amount people can deposit into cash Isas each year.

More than £3.6bn was poured into the tax-free savings accounts in February, the highest in five months and up from £3.2bn in January, according to Bank of England data.