Chancellor George Osborne has extended the availability of 65-plus pensioner bonds for another four months, due to “unprecedented demand” for the products.
So far £7.5bn worth have been sold, with over 610,000 savers purchasing the bonds since their launch last month, which crashed the National Savings and Investments website.
The pensioner bonds will now be on sale for four months, until 15 May, which is expected to push the total number of older savers benefitting from the bonds to be over 1m.
They have an annual interest rates of 4 per cent for the three-year bonds or 2.8 per cent for the one-year bonds. The government now expects that total issuance could be around £15bn of these products, compared to an original allocation of £10bn.
Mr Osborne labelled the demand “unprecedented”, stating it forms part of the government’s “long term economic plan to support savers and boost hardworking peoples’ financial security at all stages of life”.
With an investment limit of £10,000 per bond per person, the bonds are available directly from NS&I by post, phone or online.
Mr Osborne said: “I want to ensure as many older savers as possible can take advantage of these market-leading bonds, which is why I’m confirming today that potential savers will have months to invest in these hugely popular products, if they wish.”
However, Tom McPhail, head of pensions research at Hargreaves Lansdown, told FTAdviser that the timing of the scheme, coming as it does right on top of the critical phase of the election campaign, inevitably leaves the chancellor open to accusations of ‘buying votes’.
“Much has been made of the ‘free money’ being transferred from taxpayers generally to the target retired population, however it is also only fair to acknowledge that quantitative easing has bailed out the younger, borrowing population at the expense of the older savers; these pensioner bonds help to redress the balance.”
The government also announced expanding the free state pension statement service, with anyone over the age of 55 now able to request a personalised state pension statement, giving them an estimate of what they are likely to receive based on their current National Insurance record.
Until this week the scheme was only open to people over the age of 60.
Since its launch last September, the service has issued more than 76,000 statements, with pensions minister Steve Webb stating that it is crucial everyone has all the information to help them to make the right choices.
“We are making sure people have the resources and support they need ahead of the new freedoms in April, so they can take the time to plan how to best use their pension saving for a secure retirement.”
peter.walker@ft.com
