With no prior warning, the long-awaited 'Pensioner Bonds' from National Savings & Investments (NS&I) launched in January. Over the first few days, more than £1 billion worth of Bonds had been sold to more than 110,000 over-65s.
With premium rates on offer, the rush to apply for 'Pensioner Bonds' caused NS&I's website to crash almost immediately, leading to widespread confusion and payment errors.
Despite what some customers labelled a 'shambles', the Chancellor announced that the launch of 'Pensioner Bonds' was hugely successful and had produced the biggest opening sales of any retail financial product in Britain's modern history.
The stampede to secure the 'market-leading' rates was partly driven by news that the government will cap the scheme when £10 billion has been invested. However, George Osborne has announced that he is extending the deadline to apply until May.
If you're looking to purchase 'Pensioner Bonds', you will need apply online, by phone or by post. Investment is limited to £10,000 in each bond, making a maximum of £20,000 per individual and £40,000 per couple.
It is important to remember that 'Pensioner Bonds' are not suitable for all over-65s. The Bonds do not pay out until the end of their term, so they will not be suitable for those in search of a regular income. Early withdrawal penalties will occur if you need to gain access to the Bond before its maturity and tax will also be deducted from the interest paid. After tax, the one-year Bond will yield 2.24% for basic-rate taxpayers or 1.68% for higher-rate taxpayers, whilst the three-year Bond will generate a return of 3.2% or 2.4% respectively.
If you have any questions about 'Pensioner Bonds' or you are looking for alternative avenues to help boost your retirement pot, please contact Retirement and Investment Solutions on 01489 878300.