It has been revealed that upwards of 500,000 pensioners in the UK have been penalised by government assumptions on their income. When calculating a particular person's pension credit, all assets and all income has to be taken into account which on the surface appears fair enough. However, it is the way in which the government calculates interest on savings which is causing serious concern in the marketplace!

The government is currently using a ballpark figure of 10% interest on savings which is nowhere near the 1.5% UK base rates and the effective 0% which many UK savers receiving at the moment. This can have a serious impact upon pensioners with significant savings as in effect their assumed interest will be used to calculate a deduction on their annual pension payments.

When you also consider that the UK state pension has been increasing at a level less than the rate of inflation for some time, in effect pensioners in the UK have seen a cut in their pension payments in real terms. It is a scandal to think how many of these people will have paid their national insurance for decades and are repaid in this clinical manner by the government of the day.

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