The chancellor of the Exchequer indicated that the rates would be 2.8 per cent on a one-year bond and 4 per cent on a three-year bond, saying these deals would be “far better than anything equivalent” in the market today.
National Savings and Investments, the savings provider backed by the government, will issue £10bn worth of pensioner bonds with rates set to be confirmed this Autumn.
Consumers aged 65 and over will be allowed to save up to £100,000 in the bonds, which will be available from January next year.
However, Rick Eling, head of investment solutions for national advisory service Sanlam UK, questioned whether the returns would beat inflation. He said that many retirees “might be better off” by holding a portion of assets in equities.
Mr Eling added: “We need to help people get over their fear of the stock market and take a longer term view.”
