More than £1 billion of government pensioner bonds of a possible £10bn worth of bonds were sold in the first two days after they went on sale through National Savings and Investments (NS&I). On the first day the demand was so great the website and phone lines crashed within minutes. Savers flocked to take advantage of some of the best interest rates in the country at 2.8% for a one year bond and 4% for a three year bond.
Just What are Pensioner Bonds?
• One or three year bonds were available.
• Fixed interest rates of 2.8% for one year bonds and 4% for three year bonds.
• Anyone over 65 could invest up to £10,000 into each type of bond, a maximum of £20,000 per individual.
• Minimum investment of £500.
• They were not ISAs so account holders may have to pay income tax on the interest they earn. (The only way to avoid this is if your annual income is below the personal allowance,( which is £11500 this tax year) and/or you have used up the savings allowance.
• Cash invested in pensioner bonds could be taken out at any time, but at a cost of 90 days’ interest on the withdrawn funds.
• Security of money assured as they are backed by the government.
• You can’t purchase these bonds on behalf of another person.
• Contact nsandi.com, call 0500 500 000 – or write to National Savings and Investments, Glasgow G58 1SB with any queries you have on your bonds.
One of the big drawbacks with Pensioner Bonds is that your money, and your interest, are locked away for the length of the bond. If you are planning to live off your savings this could cause a big problem. If you wish to withdraw your cash early then you must forfeit 90 days of interest