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What will you do with your Pensioner Bond?

What will you do with your Pensioner Bond?

Category: Savings

Updated: 16/12/2015
First Published: 16/12/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Do you have a one-year Pensioner Bond? If so, what will you do with the money when it matures? You could soon be facing that very question: many bonds are set to mature in January when the first one-year investments will reach the end of their term, but luckily, NS&I has revealed the alternative options available to its Pensioner Bond savers.

What you need to think about

If you were one of the first people to snap up a Pensioner Bond (officially known as the 65+ Guaranteed Growth Bond) when they first came on sale in January last year, you may be wondering what to do next. NS&I will be contacting savers whose one-year Bond is close to maturity to help them decide, and if you're one of them, your options will include:

  • Re-invest into a standard Guaranteed Growth Bond for one year and receive an interest rate of 1.45%.
  • Re-invest into a standard Guaranteed Growth Bond for two years (1.70%), three years (1.90%) or five years (2.55%).
  • Cash in your bond and take your savings to another provider.

If you're happy to reinvest into a one-year bond, you won't need to do anything – the reinvestment will be made automatically. If, however, you want to reinvest into a longer term bond or perhaps cash in altogether, you'll need to contact NS&I to arrange things. The letter you receive from them will explain how to give instructions.

You should receive correspondence explaining things in more detail around 30 days before the maturity date, so if you haven't heard anything after that point, don't be afraid to contact the provider.

What will you choose?

The answer, of course, is an entirely personal one. The new rates available may seem paltry in comparison to the 2.8% of the one-year Pensioner Bond, but as Danny Cox, chartered financial planner at Hargreaves Lansdown points out, "halving the interest rate at rollover shows how generous the original Pensioner Bond was".

Remember, too, that re-investing into another NS&I product isn't the only option, and you could find that you can get better rates elsewhere. For example, the top one-year bond in our best buy chart currently comes from United Trust Bank, with an impressive rate of 2.15%. And, if you're willing to lock your money away for even longer you could find even better rates, from 2.17% for an 18-month bond (from Al Rayan Bank) to as much as 3.15% for a five-year deal (from AgriBank).

What next?

Compare savings rates

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.

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