More details about the much-anticipated Pensioner Bonds were finally released late on Friday, and it's good news for older savers – the rates are, as promised, truly market-leading, with few other accounts able to come close.
There's been much speculation about the rates on offer since the bonds were first announced in March's Budget, and happily, they're unchanged from those first predicted – the Chancellor has confirmed that the one-year bond will pay 2.8% per annum, while the three-year equivalent will offer 4%.
The bonds have been designed to "provide certainty and a good return for those who have saved all their lives and now rely on their savings in retirement", it said in a statement, with George Osborne adding that "they will give hundreds of thousands of older savers the certainty and comfort of a good return over the life of their investment".
So, after much anticipation, older savers can rejoice in the knowledge that they'll be able to get market-leading returns in less than a month's time. The bonds will be available from NS&I and are set to be officially launched in January, and will only be on offer to those aged 65 and over. You can invest up to £10,000 (or a maximum of £20,000 per person if you open one of each bond), but given that the issue will be limited to £10bn, the bonds are widely expected to be over-subscribed and could sell out fast – so you'll need to be quick off the mark if you want to take advantage!
Rachel Springall, finance expert at Moneyfacts.co.uk, comments on the news:
"Friday's announcement regarding the Pensioner Bonds is going to cause a stir, as there are many people holding out for decent savings rates to be introduced into the market. These deals are likely to be taken up very quickly, so registering for the newsletter and keeping an eye out for the launch date is vital so savers don't miss out.
"On the downside, the fact that these bonds don't offer a monthly interest option will be disappointing to those looking to supplement their income. Restricting these bonds to those aged 65 and over will also dishearten younger pensioners, particularly those who miss out by one year, as they will have to just make do with what's already on the market, which is poor in comparison.
"The average one-year bond pays 1.46% with the best buy at 1.90%, while the average three-year bond is 2.05% with the best buy at 2.51% – substantially lower than 2.8% and 4.00% respectively. As such, there is a danger that these bonds will become over-subscribed and this could mean they are only handed out on a first-come, first-served basis."
So, make sure you're ready for them! If you're 65+ and want to get some decent returns from a lifetime of saving, make sure your cash is held in an easy access account. That way, you can transfer the funds as soon as the Pensioner Bonds are launched, because there'd be nothing worse then losing out simply because you had to give notice to your savings provider. Then all you've got to do is sit back and wait for the accounts to become available, because despite a couple of downsides, these bonds are easily the best on the market – so don't miss out.
Instant access savings accounts (with bonus)
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.