The Government has announced that popular Pensioner Bonds will now stay on sale until 15th May.
Pensioner Bonds, which are available to anyone over the age of 65, were launched last month paying interest rates far in excess of other similar accounts.
The Government had initially said a maximum of £10 billion of bonds were available, but with 600,000 pensioners already opening bonds, the Chancellor George Osborne, has moved quickly to allay fears that some older savers could miss out.
Speaking yesterday, Mr Osborne said that the bonds would be open until 15th May, a week after the general election, and that he expects the overall maximum amount of bonds available to rise to £15 billion.
Speaking on the BBC’s Andrew Marr show the Chancellor said: “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.” (Source: BBC)
The change is likely to be popular with older savers, who may have worried about missing out on such a competitive interest rate, but it has also come in for criticism.
Mark Littlewood, Director General of the Institute for Economic Affairs said: “This announcement well and truly proves that we are not all in it together. Borrowing more expensively than the government needs to is effectively a direct subsidy to wealthy pensioners from the working-age population.”
He continued: “Pensioner bonds have never been anything other than a gimmick that will benefit pensioners at the expense of the taxpayer, and it beggars belief that the government is prolonging such a foolish policy.”
Pensioner Bonds – the basics
There are two Pensioner Bonds available; with a fixed term of one or/ three years.
The minimum needed to open a bond is £500 and the maximum which can be held in each is £10,000; making the maximum overall investment £20,000 per person.
The bonds are run by National Savings & Investments (NS&I) and can be opened on the internet or over the phone; they are not available via Post Offices.
The interest rates are well above the best alternatives, with the one year bond paying 2.8% and the three year version, 4%. The interest, which is payable at the end of the term, is taxable; although non-taxpayers can claim this back.