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Weekend reading: Three-year NS&I pensioner bonds to pay 4%

Good reads from around the Web.

The wait is nearly over, glass-half-full-fans of a certain age. National Savings and Investments (NS&I) has revealed the first firm details of its upcoming ‘Pensioner Bonds’.

More is to come with the launch in January, but here’s what NS&I [1] says so far:

What are the bonds?

  • Lump sum investments providing capital growth
  • Choice of terms – 1-year and 3-year
  • Designed to be held for whole term, but can be cashed in early with a penalty equivalent to 90 days’ interest

When do they go on sale?

  • January 2015 – exact date to be announced
  • Available for a limited period

Who can invest?

  • Anyone aged 65 or over
  • Invest by yourself or jointly with one other person aged 65 or over

How much can I invest?

  • Minimum for each investment £500
  • Maximum per person per Issue of each term £10,000

What about interest?

  • 1-year Bond 2.80% gross/AER*
  • 3-year Bond 4.00% gross/AER*
  • Fixed rates, guaranteed for the whole term
  • Interest added on each anniversary

The tax position

  • Interest taxable and paid net (with basic rate tax taken off)
  • Higher and additional rate taxpayers will need to declare their interest to HM Revenue & Customs (HMRC) and pay the extra tax due
  • Non taxpayers, and those eligible to have any of their interest taxed at the new 0% rate (which starts from April 2015), can claim back the tax from HMRC
  • Sorry, we’re not currently part of the R85 scheme so we can’t pay the interest gross on these Bonds

While the rates may still look laughably low to 60-somethings who remember the days of 10% interest on their savings, the bonds are table-toppers for those who are eligible to put money into them – and the 4% rate looks unbeatable, even with cash ISAs.

Here are a few media takes on these new bonds from:

Who says there’s no upside to getting old? 🙂

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

Product of the week: Not a pensioner? The Telegraph [21] reports that Yorkshire Building Society [22] is offering a fixed-rate savings bond touting a 2.4% headline rate, paying interest monthly.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1 [23]

Passive investing

Active investing

Other stuff worth reading

Book of the week: Who would have thought the rise and fall of an investment bank could make for gripping reading? Catching Lightning in a Bottle [40], written by the son of a Merril Lynch co-founder, chronicles how the Wall Street giant was led astray in the years prior to the financial crisis.

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  1. Reader Ken notes that: “FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.” [ [43]]