Details regarding the long-awaited 'Pensioner Bonds' have finally been announced. Designed to help retirees make more from their savings, the government-backed Bonds from National Savings & Investments (NS&I) will be available in January 2015 for those aged 65 and over.
The one-year Bond will pay an annual interest rate of 2.8% and the three-year Bond will pay 4%. Individuals will be able to invest between £500-£10,000 in each Bond and couples will be able to invest a total of £40,000 between them. However, only £10 billion worth of Bonds will be issued, with many experts predicting a 'stampede' of interest in the scheme and warned that if pensioners did not act fast they could miss out on the market-leading rates.
If you're interested in a new 'Pensioner Bond', it is important to note that interest will be paid annually, not monthly. Investors will also be subject to tax on the earnings from their bonds. So, if you're taxed at the basic rate, 20% will be deducted from the interest you have earned. However, even after tax, the rates are well above other fixed-rate deals currently available.
The exact date that the Bonds will be available has yet to be confirmed. We have previously mentioned that investors can stay on top of any developments by signing up to receive email alerts from the NS&I. To register, click here.