Osborne extends pensioner bond scheme

Savings jar

The government has extended the popular National Savings and Investments (NS&I) pensioner bond scheme.

A further £5 billion's worth of the over-65s bonds is being made available, taking the estiate of the total amount that will be issued to £15 billion.

The deadline for applying for the bonds has also been extended by three months until 15 May, a week after the General Election.

When the savings bonds launched on 16 January 2015, surging demand for the inflation-busting products caused the provider's website to crash.

Some 110,000 over-65s snapped up bonds in the first two days of their being on sale and 600,000 have done so in total since the launch.

Two options are available for savers – a one-year Guaranteed Growth Bond paying 2.8% before tax (2.24% after basic-rate rate has been deducted, 1.68% after the higher-rate and 1.54% after the additional rate) and a three-year version paying 4% (3.2%, 2.4% or 2.2% after tax).

Interest is paid on maturity for the one-year bond but annually on the three-year option so savers will benefit from compound interest. The minimum amount that can be deposited is £500 and the maximum £10,000 per person and the bonds can be held by an individual or jointly by couples.

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Announcing the extension to the scheme on the BBC's Andrew Marr Show, Chancellor George Osborne said the pensioner bond has been "the most successful saving product this country had ever seen".

He added: "We will guarantee that it remains on sale for a further three months because this government backs savers and supports people who do the right thing."

Anna Bowes, director of savings advice website Savingschampion.co.uk, said: "It's no surprise these bonds have been hugely successful but it was a surprise NS&I didn't predict this. With rates way over and above the nearest competition, the bonds were always going to fly off the shelf. That said it's great news that they have been extended so more savers can take advantage, especially those who will turn 65 within the next three months.

“Sceptics may suggest the timing is apt and that the extension is needed given George Osborne's statement that they expected the bonds to be available for 'months'. But in the current desperately low interest rate environment, anything that can help beleaguered savers should be commended."


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