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A home for savings after the 1-yr pensioner bond

A home for savings after the 1-yr pensioner bond

Category: Savings

Updated: 30/10/2017
First Published: 07/12/2015

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 It is now over 6 months old so the content may be out of date.

January marks the one-year anniversary of the launch of the NS&I's 65+ Guaranteed Growth Bonds, also commonly known as the Pensioner Bonds. Last year, over a million older savers battled it out to snap up the highly competitive one and three-year fixed rate bonds, which paid market-leading rates of 2.80% and 4.00% respectively. However, those who saved into the shorter-term bond will soon be faced with the question of where to invest their hard-earned savings next…

Finding the best returns

According to calculations by Moneyfacts.co.uk, savers who invested the maximum amount of £10,000 into the one-year Pensioner Bond will have earned a tidy £280 in profit (before tax) by the time their bond matures. However, when it comes to casting the net for another lucrative home for their savings, many may be disappointed by the returns on offer.

For example, the best-paying one-year bond currently on the market is from Shawbrook Bank, which offers a rate of 2.15% yearly. This means that if savers again invested £10,000 for a year, they would see a pre-tax return of £215 in interest - £65 less than that earned from the Pensioner Bond. Matters are even less encouraging for those who would prefer to invest in a high street provider: Nationwide Building Society, which offers the best high street provider deal, pays only 1.50% yearly, which is less than some of the best easy access deals on offer. The table below outlines these differences more clearly.

Overall One-Year Fixed Bonds
15 January 2015
Best High Street Providers One-Year Fixed Bonds
15 January 2015
Best Overall One-Year Fixed Bonds
7 December 2015
Best High Street Providers One-Year Fixed Bonds
7 December 2015
NS&I - 2.80% Clydesdale / Yorkshire Bank - 1.60% Shawbrook Bank - 2.15% Nationwide BS - 1.50%
Al Rayan Bank* - 1.90% Halifax - 1.40% FirstSave - 2.12% Metro Bank - 1.40%
ICICI Bank UK - 1.85% Metro Bank - 1.40% Milestone Savings* - 2.10% Clydesdale / Yorkshire Bank - 1.40%

Finding a good home for your money

The rates now available may not quite match those championed by the Pensioner Bonds, but it is still possible to secure rates that will generate you welcome interest. However, the only way to do this is to plan ahead. "Preparation is key when coming off a fixed rate deal," counsels Rachel Springall, finance expert at Moneyfacts.co.uk, "so when savers receive their one-month maturity notice from NS&I, they should start looking for a new place to invest straightaway".

But where can savers look to find the best deals? Well, checking out our best buy charts is one place to start. Here you can check out the best deals in the market and take note of the ones that suit you and your savings goals. Starting now and keeping an eye on any changes to the savings market means that you will be ahead of the game when the time comes to invest elsewhere, putting you in the best possible position to secure yet another year of decent returns.

When you've found the right account to move your NS&I Pensioner Bond savings to, make sure to inform NS&I by post or online as phone instructions won't be accepted. Then you can sit back safe in the knowledge that your money is going to another good home.

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.