Research by Governor Money shows that the top 20 savings products aimed specifically at the over 50s offer 2.23 per cent AER on average, while the top 20 whole-of-market accounts offer 3.17 per cent AER on average.
According to Moneyfacts.co.uk, the best over 50s variable product pays 2.8 per cent AER (West Bromwich Building Society High Income Over 50 Notice 2). This account has a 90-day notice period. However, searching the market can get you a much better deal. For example, on instant-access accounts, you can get 2.85 per cent with Virgin Money's Easy Access Saver, or 3.06 per cent with Manchester Building Society's Platinum Instant Issue 2. If you can lock your money up for a year, then you can achieve 3.65 per cent with Cahoot's 1 Year Fixed Rate Bond (Issue 2).
Miles Bingham, chief executive officer of Governor Money, says: "The recent Budget and subsequent 'granny tax' controversy shone the spotlight on the finances of older people. Labelling products as exclusive for the over 50s usually implies they come with some benefit or additional value not available to the public at large. But our research demonstrates that this is clearly not the case when it comes to savings. Governor Money's analysis of over 50s savings accounts suggests that older savers should treat such products with a high degree of caution and not limit their options.
"Using an average of the top 20 current rates for over 50s products, savers with £5,000 would accrue £111.50 interest over one year, compared with £158.5 for the whole-of-market top 20 average. A difference of £47 shows why over 50s shouldn't be drawn into choosing a product just because it appears to be tailored for their age group. Furthermore, there isn't a great deal of choice in this section of the market. By only looking at over 50s products, savers would be ignoring over 93 per cent of the market.”
You can download the best savings rates, using the tools and calculators page in the Your Money section of www.investorschronicle.co.uk here.