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Pensioner bonds unveiled to help ageing savers

Comment by Rick Eling in City A.M.

Pensioners will be able to buy high yielding saving bonds from January next year, amid vote-winning moves by government to help ageing savers hit by historically low interest rates. 

National Savings and Investment plans to issue up to £10bn worth of bonds paying interest rates closer to the rate of inflation.

The plans for the products, dubbed pensioner bonds, include a one year bond paying 2.8 per cent and a three year bond paying four per cent.

The bonds will only be sold to people over 65 years old, with an investment limit of £10,000 per product. The move is designed to help pensioners who have suffered low rates of interests on their savings since the financial crisis, a situation which has prompted widespread criticism.

More details will be revealed in the chancellor’s next big set piece event, the autumn statement, which is set for December this year. 

The move is set to cost the exchequer £45m in 2014-15 rising to £170m in 2015-16, according to forecasts published by the Treasury.

However, Sanlam UK’s Rick Eling said: “Many retirees might be better off if they considered holding a portion of their assets in something with real growth potential, like equities.”

See the publication here.  (Please note this link will take you to an external website).

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.