NS&I's 'Pensioner Bonds' go on sale
The newly-named 65+ Guaranteed Growth Bonds, paying market-leading rates, are now available.
NS&I’s savings bonds for over-65s, dubbed ‘pensioner bonds’ by the media, have now gone on sale. They have actually been called 65+ Guaranteed Growth Bonds.
There are two bonds available: a one-year fixed rate paying 2.80% gross interest and a three-year paying 4%.
Both are market-leading rates, although you will have to pay tax on the interest, which is added annually.
You can save from £500 up to a maximum of £10,000 in each bond. You can save in both bonds yourself or in both jointly with someone else.
The bonds are only available to people aged 65 or over, although you don’t have to be a pensioner. If you’re saving jointly with someone else, both people need to be 65+.
As these are fixed rate bonds, you will need to lock your money away for one year and three years respectively.
If you cash them in early, you’ll pay a penalty equivalent to 90 days’ interest.
The bonds can now be applied for online at the NS&I website, or by phone (free from a landline) on 0500 500 000.
Experts predict they will sell out quickly so don't wait if you want to apply. The website has already crashed under the volume of people trying to apply.
How they compare
For over-65s with a decent chunk of money the 65+ Guaranteed Growth Bonds can't be beaten by high street savings accounts, as this table shows.
|
Account |
Type |
Gross interest rate |
Net interest rate for basic rate taxpayer |
Minimum deposit |
|
NS&I 65+ Guaranteed Growth Bond |
Three-year fixed rate savings account |
4% |
3.2% |
£500 |
|
Secure Trust Bank |
Seven-year fixed rate bond |
3.25% |
2.6% |
£1,000 |
|
Secure Trust Bank |
Five-year fixed rate bond |
3.03% |
2.42% |
£1,000 |
|
NS&I 65+ Guaranteed Growth Bond |
One-year fixed rate savings account |
2.8% |
2.24% |
£500 |
|
Virgin Money Fixed Rate Cash E-ISA |
Five-year fixed rate ISA |
2.5% |
2.5% |
£1 |
|
Coventry Building Society |
Three-year fixed rate ISA |
2.4% |
2.4% |
£1 |
|
Secure Trust Bank |
Three-year fixed rate bond |
2.51% |
2% |
£1,000 |
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Comments
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Rubbish rates. The robbery continues. If they are for over 65's, I'd put the money in my draw down pension, get 20% paid in by the tax man and earn 7% net.
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Tried to buy online - website unusable because even when its "working" its so slow that it took 30 minutes before failing as it attempted to find my address. The telephone numbers are constantly engaged too. It was predictable that there would be huge demand for these products and NS&I have patently failed to do their homework and test the website for these purchases. Even if the website is their normal one for day to day purchases they have clearly not stress tested it for high enough demand. Lessons from previous cases like Northern Rock, the Olympics and Rugby World cup have been ignored. However we're now told that the bonds will be on sale for "months" which might alleviate the need to buy quickly. Clearly the interest rate is attractive given rates and elsewhere and inflation. An election bribe? - possibly! Will it change voters intentions - I doubt it. But it forces some people into the taxmans clutches as you can't register for gross interest via an R85 form so those who would have taken that option will have to submit a tax form (R40) sometime after april 2016. This is particularly stupid and prime example of not joined up government thinking. There's plenty of time to fix that mistake but since the DWP can't operate a tax code on state pensions and other taxable benefits I'm not hopeful of any movement.
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15 January 2015