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 It is now over 6 months old so the content may be out of date.


Lieke Braadbaart

Online Writer
Published: 04/01/2018

In January 2015, NS&I launched the 65+ Guaranteed Growth Bonds, which the media dubbed as Pensioner Bonds. Now, those who invested in the three-year version of these bonds are finally starting to reach their end dates, and given the 4% gross interest rate they've been enjoying they will be in for quite a shock, as no rate even comes close.

NS&I is currently contacting people whose Pensioner Bonds are due to mature, and offering them a three-year rate of 2.20% on their Guaranteed Growth Bond as a replacement. This isn't that far off from the market-leading three-year fixed bond rate on our Best Buy chart, wherein NS&I takes up several competitive places.

However, if you're looking to change to a different term, there are certainly better deals out there. Provided you've willing to transfer the full £10,000 you originally invested (which was the maximum amount that could be saved in a Pensioner Bond), you could get an expected profit rate of 1.91% over 18 months, offered by Al Rayan Bank.

Alternatively, the highest one-year fixed bond rate for those with £10,000 sits at 1.86%, also from Al Rayan Bank, which is much higher than NS&I's one-year rate of 1.50%. Even the top monthly interest savings account, a 95-day notice deal from Milestone Savings, can beat this with an expected profit rate of 1.52%.

These shorter-term bonds can be ideal if you think rates are due to rise within the next few years. Those who'd rather put their funds away for the long term could find a rate of 2.50% over five years, or even an expected profit rate of 2.55% if they have an additional £15,000 to invest (the Bank of London and the Middle East requires a minimum investment of £25,000).

Given that the youngest Pensioner Bond customer will be 68 years old by now, you might instead want to simply enjoy the money you've set aside for three years, plus of course the interest. NS&I will happily allow you to cash in your Bond to use however you want.

What next?

Have a look at our savings Best Buys to see the top rates across all terms and types

Ready to retire? Consider adding the funds to your pension pot and taking out an annuity for a guaranteed income in retirement


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