Pensioners warned as £10 billion in NS&I ‘granny bonds’ set to mature

Published by Adam Williams on 04 January 2018.
Last updated on 04 January 2018

Pensioners warned as £10 billion in NS&I ‘granny bonds’ set to mature

Pensioners are being urged to check their maturing savings accounts with National Savings and Investments (NS&I) to ensure their money is not transferred to a new product with a lower rate of interest automatically.

More than 885,000 pensioners opened a three-year 65+ Guaranteed Growth Bond – dubbed ‘granny bonds’ - with NS&I between 15 January and 15 May 2015.

There is around £10 billion in these accounts, which will be maturing in the next few months, but pensioners need to act if they do not want their funds to be transferred to a lower paying account.

The 65+ Guaranteed Growth Bond currently pays 4% interest but bondholders will have their money rolled over into NS&I’s three-year Guaranteed Growth Bond automatically, which pays just 2.2%.

While this rate of interest is competitive in today’s market, it is lower than the Moneywise Best Buy – the Access Bank UK Sensible Savings Three Year Fixed Term Savings Bond, which pays 2.25% and comes with Finance Services Compensation Scheme protection up to £85,000.

Customers who do not want to see their cash automatically transferred to the new bond on maturity should contact NS&I to arrange to transfer the funds elsewhere. Customers will receive a letter from the provider 30 days before maturity and must reply to this letter or visit the NS&I website to arrange a transfer, which will take place when the account matures.

If customers do not move their money and are rolled onto the new product, they can withdraw funds from the new product but will pay a penalty of 90 days’ interest. 

Anna Bowes, director at independent savings advice site Savings Champion, says: “Savers who have been enjoying 4% are clearly going to be disappointed that on maturity their return will drop by at best over 43%, as the best three-year rate on the open market is paying just 2.25% gross/AER.

“However, as the NS&I automatic rollover option is very competitive, it may not be worth moving the maturing money elsewhere for those savers who want to tie up their money for another three years. Especially as there is an option to access the funds early, if necessary, with a penalty equivalent to 90 days interest on the amount to be withdrawn.

“However, if they do want earlier access or a monthly income, it is sensible to consider moving from NS&I, to make the money continue to work as hard as possible – as there are better equivalent options elsewhere.”

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My mother, Mrs Doris Withers

My mother, Mrs Doris Withers died in December 2003. We have recently been sorting some of her paperwork and have discovered a (National Savings Pensioners Bond) number xxxxx register xxxxx for £5,000. We have not seen this before and do not know what happened to it. Can you advise please or send a telephone number for us to speak to someone. We live in France.

Thank you.

Mr R V Withers

Hi Mr Withers, thank you for

Hi Mr Withers, thank you for your comment. 

Moneywise recommeds looking at this page on the NS&I website for more information on your issue:

https://www.nsandi.com/what-do-i-do-if-nsi-customer-has-died

That page includes contact information and what to do if you live abroad.

Many thanks,

Moneywise Edmund