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Pensioner Bonds

The Government has made £15 billion of pensioner bonds available to the over 65 public paying 2.8{677d09a4efbb15fa2071f70b399e2da7420a8ab894c50422b3cd4dbcb24abd32} for one year fixed and 4{677d09a4efbb15fa2071f70b399e2da7420a8ab894c50422b3cd4dbcb24abd32} for three year fixed.

These bonds are available through National Savings & Investments ‘(NS & I)’ either online, on the phone or through the post until the extended deadline of the 15th May 2015 or until the allocation is used up. George Osborne initially announced a £10bn allocation however has recently stated that he expects that to be extended to £15bn. Nonetheless with demand expected to be high we suggest applying sooner rather than later either online or on the phone (0500 007007).

The maximum investable amount is £10,000 into the one year bond and £10,000 into the three year bond so £20,000 per person in total. A relatively small but not negligible amount.

It’s always important when tying money away in a fixed savings account to make sure it’s not money you are likely to need over the duration of the fixed period. Having said that it is going to be possible to withdraw your money early for a penalty of 90 days interest.

Which interestingly means that it is in fact better value to take out a three year bond and withdraw after one year with the penalty than take out a one year bond.

Additionally it is worth noting that you do pay normal savings tax on the bonds (for example basic rate taxpayers lose 20{677d09a4efbb15fa2071f70b399e2da7420a8ab894c50422b3cd4dbcb24abd32} of their interest) which unfortunately you aren’t able to avoid. The only way you will be able to reclaim your tax if you are not a taxpayer is at the end of the tax year.

Whilst every effort has been made to ensure the information contained within this article is technically correct the accuracy of the information cannot be guaranteed. This article does not constitute financial advice.