What are pensioner bonds all about?
NS&I has announced that new fixed rate Bonds for clients aged 65 and over are to launch in January 2015. Known as Pensioner Bonds, they are being greeted as a “good thing”. The team at Mantle Financial Planning gives us the facts.
There will be a choice of terms available: 1-year and 3-year, with a minimum of £500 for each investment and a maximum of £10,000 per person per term. So a couple aged 65 could invest a maximum of £40,000, if they each invest in both terms.
The Chancellor has confirmed that the interest rates for the new fixed rate Bonds will be:
- 1-year Bond 2.80% gross/AER*
- 3-year Bond 4.00% gross/AER*
* Gross rate of interest and will be subject to tax at your nominal rate at the end of the term.
You will not have access to your funds until the end of the maturity date depending on the term selected.
How to get started
You can make applications to invest in the Bonds online at www.NS&I.com, by phone 0500 500 000 or by post to National Savings and Investments, Glasgow G58 1SB. once on sale.
What the industry thinks
The reaction of the financial industry has been mixed, according to the FT Adviser, because although the interest rates are high, they don’t offer monthly interest and there’s a danger of the bonds being over-subscribed. And CityWire agrees that pensioners should not apply by post if they want a chance of being accepted for the offer.
Find out more
To find out more you can talk to an independent financial adviser such as Mantle FP (contactable on 020 8394 0954).
The consumer-focused financial advice site moneysaving expert has a useful Q&A.
If you’re not sure about the new bonds or you or your parents don’t qualify, Which? has put together a list of alternative savings options.
If you are interested in financial planning for your parents or yourself you may like to look at our other articles:
- How to manage your parent’s financial affairs
- How to claim a lost pension
- What’s new for our parents in the Autumn 2014 budget statement?
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