Unfortunately, there was no exciting offer from National Savings & Investments in the Autumn Budget yesterday, which will be a big disappointment to many, especially those with a three year 65+ Guaranteed Growth Fund (often dubbed ‘Pensioner Bonds’) coming to an end in the New Year.
With this in mind, it’s important for savers to diarise their bond’s maturity date, as it’s unlikely that the rollover option will be competitive; therefore savers will probably want to switch.
When the one year bonds matured in January 2016, the rollover option was just 1.45% gross/AER whilst the best rate available on the open market was 2.06% gross/AER (RCI Bank) – some 42% more.
But it’s important that 65+ Guaranteed Growth Bond holders understand the NS&I has amended an element in the Terms and Conditions that affects the way maturity instructions are given.
NS&I has announced that, due to number of people with maturing bonds, they will be unable to accept maturity instructions by phone.
On their website, NS&I states;
The following amended paragraph replaces paragraph 80 in the terms and conditions for 65+ Guaranteed Growth Bonds:
Telephone and Internet Service
80. We offer the opportunity to purchase and manage Bonds via the telephone and/or internet, and to opt to receive paperless documents. However, Bond holders will be unable to provide their maturity instructions for their Bond over the telephone. The Service is offered to Bond holders and, where a Bond holder lacks capacity or has created a valid Power of Attorney, a limited Service is offered to those entitled to manage their Bond (each a “prospective user”). To use the Service to both purchase and manage a Bond, a prospective user will need to register either by telephone or via the internet as part of their application to purchase. If a prospective user wants to register to use the Service to manage a Bond that they have already purchased, they can register either by telephone or via the internet. We may need to ask you to return documents by post to complete your registration. Deputies and attorneys can only register to use the limited Service by completing the registration form (available on request from NS&I) and returning it to us for processing.
So, you’ll need to return your maturity instruction in the post or online and you’ll want to do that BEFORE maturity, otherwise you’ll be automatically rolled into a new bond with what may be an uncompetitive rate.
What do Pensioner Bond holders need to do?
You will receive a printed pack explaining your maturity options 30 days before your 3-year Guaranteed Growth 65+ Bond reaches the end of its term. For joint investments this will be sent to the first-named investor only.)
The pack will give you all the information you need to decide what to do when your Bond matures. You don’t need to do anything until your pack arrives and when it does, feel free to call us to find out the best rates elsewhere, so that you can make an informed decision.
At the moment, NS&I has a 3-year Investment Guaranteed Growth Bond, which is paying a competitive 2.20% gross/AER - the best rate currently available elsewhere is 2.25% gross/AER. But this bond does have a maximum deposit of £3,000 per investor and is not restricted to any age group.
We’ll have to wait and see what the Pensioner Bond maturity options will be. We will of course let you know when we find out. But if you need any further help, as ever, please do not hesitate to contact us on 0800 321 3581