Pensioner bonds to be launched this month
The Treasury has confirmed the interest rates for the new National Savings and Investments (NS&I) product called pensioner bonds. The new pensioner bonds will offer greater certainty and a better return for pensioners many of whom rely on savings income and have been hit by low interest rates for a number of years.
There will be two bonds available from January 2015 although an exact launch date hasn’t yet been published. The one-year bond will pay interest at 2.8% and the three-year bond at 4%. Interest on the bonds will be taxable, but savers that are eligible can receive the interest tax-free.
Pensioners will be allowed to invest a maximum of £10,000 in each bond, meaning that a couple both aged over 65 will be able to invest a total of £40,000. The rates will be guaranteed and in the case of the death of one spouse, the bonds will revert to the surviving spouse. There is a minimum investment of £500 per bond.
The NS&I is expecting high demand for these bonds which will be available directly from NS&I by post, phone or online. There will be a limit on the amount of bonds that the Treasury will issue of £10bn. Although this amount is very large, the interest rates on offer may mean that the bonds will only be available for a limited time.