In low-interest era it might be time to go Dutch with savings

I WAS shocked to learn that last Sunday Andy Pandy qualified for a bus pass. That's him 60 now and he's still with Looby Loo. Where did all the years go?

I wonder how effective their retirement savings plans have been. Have they saved enough?

I used to listen to complaints from my mum and dad about what UK inflation was doing to their savings. Apparently when they were younger they could get into the pictures for 3d - yes that's thruppence - or in today's money about 1p. And if they waited until half time they got in for half price and could afford pickled eggs on the way home. Glory days, eh?

And now I sound like them. It cost me 1.60 for half a dozen free-range eggs the other day. That's more than 25p an egg. When I was at university in the late 60s you got four fish suppers for that.

As many of you know the UK economy is apparently in a bit of a mess. So there are going to be cutbacks. According to eminent economists, including Anatole Kaletsky and the economic unit at Invesco Perpetual, interest rates are going to remain as low as they are today for the rest of this decade.

I don't think they'll be far wrong. History shows that when economies get in the kind of mess we're in today it's the old who suffer, especially those who have saved hard.

The vast bulk of people in retirement are wary of stock markets and frankly don't understand much about gold funds or gilts or any fancy schemes peddled by banks and insurance companies. They stick their money in banks and building societies - with-profits bonds, endowments, cash Isa and the like. Boy, have they suffered. And they will continue to do so.

There's an estimated 100 billion or more languishing in with-profits bonds, which for the past ten years have paid virtually nothing to the customer.

If you try to take the money back they hit you with big penalties, although over the next two years it's estimated that at least 400,000 customers will hit ten-year anniversaries, allowing them to remove their money without a charge. So do check your position.

It's also estimated there is as much as 200bn lying in cash Isas earning something like 0.1 per cent, and there's lots more languishing in banks and building societies earning virtually nothing. Fifteen years ago a decent building society account would pay about 4 per cent before tax and inflation, and savers lost money in real terms. Last year a similar account was yielding 0.3 per cent before tax and inflation, and probably losing 3 per cent a year after charges.

Now the Dutch may have turned their back on integrity in football but fortunately not so when it comes to managing money. Twice a year we see Tineke Frikkee, the Dutch manager of the Newton Higher Income Fund, originally launched 16 years ago.This kind of fund is ideal for people in retirement looking for a decent income that rises year by year and protects against inflation. Her fund's got a great long-term record, first in its sector over ten and 15 years.

Right now it's providing an income of almost 7.6 per cent before tax and inflation. It's cautiously managed.

This kind of plan is ideal for people in retirement, who will be looking to the next ten years and see hardly any income coming at all from deposits and the like. Over the past 15 years the income from the plan has risen by 9 per cent every year - that doubles your income every eight years.

Over the next three to five years Frikkee believes the total return from income and a wee bit of capital growth is likely to exceed 11 per cent every year. Isn't it about time that you consider going Dutchww?

• Alan Steel is chairman of Alan Steel Asset Management