An Interesting Proposition

An Interesting Proposition

The government has now set out much of the blueprint for their new pensioner bonds under the National Savings & Investments banner. There will be two different bonds available;

  1. A one year bond, paying gross interest of 2.8% per annum. The maximum investment amount is £10,000 per person.
  2. A three year bond, paying gross interest of 4% per annum. Again, the maximum investment amount is £10,000 per person.

Clients are able to invest into each type of bond; a total investment of £20,000 (or £40,000 for couples). Although these accounts are taxable, they still represent good value when compared to similar products on the market, even for higher-rate tax payers.

Year One Accounts

Year Two Accounts

Clearly these new bonds offer far better value than anything else available on the market unless you are a higher rate tax payer locking monies up for only 12 months. Our belief is that clients should be committing monies to these Pensioner bonds while they are available.

Capacity across the country is £10 billion, or enough for 500,000 pensioners assuming that they utilise their allowances in full. There are an estimated 11 million people eligible in the UK and we therefore expect capacity to be reached very quickly given the significantly larger rates of interest on offer.

A launch date has not yet been announced but we do not expect it to be this side of the New Year. As soon as the launch date is announced and the paperwork is available, we will be writing to all of our clients eligible for these bonds.

Owen Harris
Senior Administrator
01633 653 186