My mother passed away in December. In going through her affairs I found a Post Office Savings book. It had a balance of £1, 1 shilling and 7 pence in 1954.
I have sent this to National Savings and Investments and it has replied with a letter saying that the value is now £4.88.
I find it quite hard to believe that it has made so little gain after 64 years, do you think this is correct or has it made a mistake?K.H, via e-mail.
Royal sum? My mother’s savings book had a balance of £1, 1 shilling and 7 pence – what is it worth in 2018? Pictured, the Queen’s Coronation in 1953, the year the account was opened
Lee Boyce, consumer affairs editor at This is Money, replies: This is likely to be a common scenario across the country – finding old savings books with balances in from many moons ago.
You kindly photocopied the savings book, which was an account opened in a Post Office in Greenford, in the London Borough of Ealing in 1953 – the year Queen Elizabeth II had her Coronation.
HOW THIS IS MONEY CAN HELP
I used the This is Money inflation calculator to see how much £1, 1 shilling and 7 pence would be worth today – and the answer is £28.67, some way off the savings growth.
So how did National Savings work out it is worth £4.88?
Post Office Savings books were renamed National Savings Ordinary Accounts in 1969, hence why it is NS&I dealing with the matter.
From a different time: The Post Office savings book found by the reader
NS&I investigated. A spokesman said: ‘The customer’s account was opened in 1953, and subsequent interest adds and capital withdrawals meant that at the end of December 1970, the balance was £1, 19 shillings and 7 pence.
‘In 1971, decimalisation meant that this balance was converted to £1.98 and interest was calculated by varying rates of interest, added annually.
‘This was between 1971 and 2008. From here, the customer’s investment was moved to the Residual Account.
‘The interest rate for the Residual Account is currently 0.1 per cent.
‘This means that when a customer cashes in their investment held in the Residual Account, the closing balance is calculated with the current rate of interest.
‘Upon repayment, the investment will have been calculated to adjust for 0.1 per cent to be added for each year the investment was in the Residual Account.
‘When the customer cashed in his late mother’s savings book, he will have seen that the closing balance was £4.88, in line with the interest gained between 1953 and 2008, and including the adjustment for the Residual Account interest.’
Lee Boyce adds: I calculate this as a typical annual return of 1.96 per cent since 1971.
This compares to total inflation of 1,321.74 per cent over the same time frame (again, worked out with our inflation calculator). This averages out at 5.78 per cent a year over the 46-year period.
I guess it goes to show what inflation can do to your investments and savings if you don’t do something to protect them.
THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS
Aldermore pays 1.65% interest on its two-year fixed rate Isa account. Interest can be payed monthly or yearly. It requires a minimum deposit of £1,000.
The AA pays a top rate of 1.16% AER on its easy access Isa account. The account comes with a 12-month 0.96% rate bonus so remember to find a better account before the rate drops. Minimum deposit is £100.
Ford Money pays 1.85% AER interest on its 18-month fixed rate savings account. The minimum deposit is £500. The bank has a Best Rate Guarantee which means that if it raises rates before you make your first deposit it will increase yours too.
Atom Bank pays a top rate of 1.95% AER fixed interest on its one-year Fixed saver which lasts for 12 months. The account requires a minimum balance of £50. Accounts are managed via the challenger’s smartphone app.
RCI Bank pays 1.3% AER variable interest on its easy access deal. Deposits in its Freedom Savings Account have no FSCS protection, but you are covered for up to €100,000 by the French equivalent (FGDR).