While it is indeed a sensitive topic to write and discuss, it remains a prevalent issue in our society that necessitates open dialogue, debate, and resolution. From an economic standpoint, pensioners are integral members of any nation’s society, deserving of distinct treatment with enhanced care and support.

From a business perspective, pensioners constitute a significant client segment. In business and marketing, tailored services should be offered to ensure their satisfaction based on factors such as age and income.

Interest rates are always a sensitive area in financial institutions, and those responsible for setting them on assets and liabilities must remain vigilant. One wrong decision can have detrimental effects on the firm.

How are interest rates set and decided upon? Is it driven by competition, economic conditions, or political influence? Those responsible for setting interest rates must be cognizant of the global economy or at least the economic condition of their own state.

In my previous role in the industry, I was tasked with filtering clients and segmenting them, accordingly, ensuring that clients were treated appropriately, and products and services were offered accordingly.

In most of today’s financial markets, including banks, insurance companies, and leasing companies, pensioners are charged the same interest rates as others.

“I have requested my bank to reduce my loan interest as I am a pensioner and can’t afford 6%,” said one of the bank borrowers. “My request had not been considered,” the borrower added.

According to Fahlevi (2019), the amount of the loan is referred to as the principal or principal value, while the percentage of the principal that must be paid as fees or interest within a certain period is known as the interest rate.

It has been well defined by Fahlevi (2019), where extra money can be charged to borrowers based on agreement. Can pensioners afford the significant extra amount to pay, let’s say, instead of 4.0 percent, it is 6.0 percent?

The level of interest rates directly and indirectly affects home loans (Belke and Polleit, 2010a, Part VII). Today, many pensioners who are home loan borrowers are affected as their interest rates remain the same as when they were employees.

With low income and high interest rates, their economic status is negatively affected.

Both parties can be affected, ironically. If banks, for instance, reduce interest rates, their profitability will be affected. No bank desires this outcome. If pensioners pay high interest rates, their survival level will be affected. Both parties aim to survive.

Will this lead to an economic problem? It may. In such scenarios, economists and the role of Central Banks should exist to balance it.

However, in Oman, the problems faced by pensioners should be addressed and supported to prevent them from becoming socio-economic issues.

Given the significant competition among financial institutions in the market, especially regarding fluctuations in interest rates to attract customers, the intervention of the Central Bank of Oman would be beneficial to safeguard the interests of pensioners by introducing a policy for pensioner borrowers.

About the Author: Mohammed Anwar Al Balushi is the Academic Lecturer and Advisor at Oman College of Management and Technology 

Disclaimer : The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of TAS and TAS does not assume any responsibility or liability for the same.