New research has shown that older savers could miss out on the great interest rates offered by Pensioner Bonds if they don’t act quickly.
Last week, National Savings & Investments (NS&I), who will administer the Pensioner Bonds, announced the interest rates which are well in excess of other comparable accounts.
The one year fixed rate Pensioner Bond will pay a gross interest rate of 2.8%, whilst the three year fixed rate will pay 4.00%.
Act quickly or miss out
However, concerns have been raised that the attractive rates, coupled with the fact that NS&I can only allow £10 billion to be invested into the bonds, might mean the products ‘sell out’ quickly and will be withdraw shortly after going on sale in January, leaving some savers disappointed.
New research from Saga has confirmed this theory.
According to Saga 34% of people aged over 65 plan to open a Pensioner Bond and deposit an average of £13,876.
The figures confirm that savers who want to open Pensioner Bonds should act quickly when they go on sale in January 2015; the exact date has yet to be confirmed.
The research has also showed that ISAs are likely to become more popular as a result of the changes made in 2014. So far this year the Government has:
- Increased the maximum annual subscription to £15,000
- Changed the rules to allow the new maximum to be paid entirely into a Cash ISA. Previously this was capped at 50% of the maximum subscription
- Allowed investors to transfer Stocks & Shares ISAs to Cash ISAs
- Changed the rules so that widows or widowers can ‘inherit’ their spouse’s ISA and keep the tax advantages
According to Saga the rule changes will encourage 27% more over 50’s to open ISAs.
Responding to the figures, Jeff Bromage, Chief Operating Officer, Saga Personal Finance, commented: “Many over 50s rely on interest from their savings to boost their income. Our research shows that they clearly appreciate the effort the Government has made to make their retirement savings work as hard for them as possible and they intend to take them up on the offer. However, the investment limits on Pensioner Bonds means that many people will also be looking for alternative reliable homes for their money, such as ISAs to create both income now and growth to help fund the retirement of their dreams.” (Source: Saga)
We’re here to help
If you would like more information on the new Pensioner Bonds, or indeed making your savings and investments work harder for you, our advisers are here to help.
Call one of the team today on 0115 933 8433 or email firstname.lastname@example.org