Alistair Darling, the Chancellor, confirmed recently that he is planning to take action to help pensioners hit by reduced saving rates of less than one per cent. The moves will be a welcome relief for savers, particularly the elderly who are more likely to rely on their income from bank deposits. How to save effectively is a real challenge at this point in time.

With the Bank of England having cut rates from 5% to 1%, pensioners who rely on income from their savings are increasingly likely to see their income slashed as banks drop rates.

Furthermore, recent figures from the Office for National Statistics are showing more and more pensioners are being forced back to work to supplement their income. Combined with utility prices at record highs, there is increasing pressure on household budgets for the elderly and additional help with saving money is required.

Among the measures now actively being considered by the Treasury designed to help this group are

1.      An increase in the tax threshold for over-65s. This recognises the fact that elderly savers in particular had been hit by the interest rate reductions. Four out of 10 savings accounts are held by those over the age of 55, with many elderly people relying on a modest income from their investments to top up their pensions. On average, deposit accounts now pay less than one per cent.

2.      An extension of the limits for tax-free Individual Saving Accounts (ISAs), which have barely changed since being introduced a decade ago. The limit is currently £7,200, only £200 more than when they were introduced 10 years ago.

But do you think Mr Darling has gone far enough to help out? Even if you do not fall into this group yourself, you will no doubt have relatives or friends who do. Let us hear what you think should be done to help the elderly at this time.