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LONDON (Reuters) - Like many Britons of his generation, 66-year-old Ken Bibby is proud to have worked hard, watched his pennies and paid his way, but after 50 years saving for his old age, he says his prudence is being punished.
Sinking interest rates in the United States and across Europe are penalizing millions of the elderly who depend on savings for income to bolster state pensions, and who have also experienced rapid inflation.
As governments facing global recession focus on cutting interest rates to kick-start lending and spur consumer demand, some older people seeing interest income collapse are preparing to protest.
"We are absolutely determined to have our voice heard on this," said David Kippest, a 67-year-old pensioner activist who, like Bibby, has seen hundreds of pounds wiped off his savings income since October as interest rates fell to record lows.
"There is a movement beginning to take shape," said the representative of the National Pensioners' Convention, which he added was one of the strongest elements in that movement.
Britain is the country in Europe most keenly feeling the pain: the Bank of England has slashed Britain's base interest rate to just 1.5 percent from 5.0 percent in the past four months.
Retail banks have been swift to follow suit, with some cutting rates on instant access accounts to as low as 0.1 percent. Rates of up to 4 percent are still available, but only for those willing to lock their money up for defined periods.
Older people, who spend a significantly higher proportion of their funds on food and heat than the young, are still feeling the effects of rapid food and fuel price inflation from 2008. This can mean that in real terms their incomes fall sharply.
Bibby, who lives in Redcar, north east England, says he and his 64-year-old wife Judith have lost around 40 pounds ($55) a week from their joint income as interest rates fell.
"There are certainly no more tomatoes-on-the-vine in our house," said Bibby, explaining how he now shuns top-of-the-range products in his supermarket trolley. "Now we go for the value packs of tomatoes at 59 pence."
Bibby has worked since he was 16, spending most of his career as a textile technologist for the chemicals firm ICI. His savings were meant to provide a comfortable retirement, maybe with a holiday or two in the sun.
"I know many younger working people with good jobs who have suddenly been given a bonus of 300 or 400 pounds a month as mortgage rates have come down," he told Reuters.
"Whereas people like me who have worked and saved all their lives have had about 100 pounds a month taken away. To me, that is Robin Hood in reverse -- they're taking money from the prudent and giving it to the very people who caused the problem in the first place by taking on irresponsible mortgages."
In Britain, people over 60 form one of the most politically engaged age groups and, as elsewhere in Europe, their ranks are being swollen by an aging population and falling birth rates.
British campaigners hope a "day of action" planned by the National Pensioners' Convention on April 6 could mark a turning point.
Organizers say politicians from all parties should be forced to recognize the pain pensioners are feeling, and realize the political risk of ignoring them.
Ros Altmann, an independent pensions consultant and former adviser to the British government, said that of Britain's 12 million pensioners, around half have savings which were meant as a top-up for state benefits or employment pensions.
"If on average, they had around 20,000 pounds of savings, then reducing rates to 1.5 percent is like cutting their income by 20 pounds a week -- it's like a huge tax increase, or a massive pay cut, it's an absolute outrage," she told Reuters.
In Germany, where euro interest rates have fallen to 2.5 percent and are forecast to drop to around 1.5 percent by the end of this year, the elderly are also feeling the pinch, even with a traditionally more generous statutory pension cushion.
"It's not been as serious here as with systems based on capital cover," said Ulrike Mascher, president of Sozialverband VdK, the biggest pensioners' lobby in Germany. "In Britain the proportion of pensioners whose income is based on capital cover is markedly higher, and this is even more the case in the U.S."
British figures show that in 2006/07, more than 80 percent of pensioners had savings of some sort: a fifth had savings of less than 1,500 pounds and around a quarter of 25,000 pounds or more.
"In America what's happened is that pretty much a whole generation of pensioners are going to have try and find some way of making ends meet because some have lost everything," Mascher said.
Hans Joachim Friedrich, 86, an ex-journalist and former spokesman for Germany's ZdS pensioners' interest group, said pensioners must fight for their rights -- now and in the future.
"I personally can't complain about what I get. But it'll be tougher for younger generations," he told Reuters. "The number of pensioners is increasing. And something needs to change."
Even bankers, keen to retain deposits to help preserve their businesses, are voicing support for savers and pensioners.
John Varley, chief executive of Barclays Bank, one of Europe's largest, has said authorities risk "losing sight" of savers, warning that "although an awful lot of energy has been directed at looking after those who borrow... savers outnumber borrowers (in Britain) by a significant margin."
British Bankers' Association figures show more than 9.7 million mortgages were held in 2007. At more than 140 million, the number of interest-bearing savings accounts was in excess of double the population.
Prime Minister Gordon Brown, who must call an election in Britain by mid-2010, has so far focused efforts to divert political blame for the financial crisis on rescuing Britain's banking system.
Brown, whose Labor Party tends to focus on social justice, nonetheless faced pensioner ire in 2000 when, as finance minister, he set what pensioners called a "derisory" increase of 75 pence a week in the state pension.
He has so far promised vaguely to do "everything possible" for old people and savers.
Both consultant Altmann and banker Varley want more tax incentives on saving, especially for pensioners, and David Cameron, leader of the opposition Conservative Party, has called on the government to scrap a 20 percent tax on savings accounts and raise the tax threshold for pensioners.
"We are looking at ways in which we can influence the outcome of the next election," said pensioner activist Kippest. "We will be talking to candidates from all political parties. We are absolutely determined to have our voice heard."
Additional reporting by Dave Graham in Berlin; Editing by Louise Ireland and Sara Ledwith