While it wasn’t announced in the Budget last month, National Savings and Investments (NS&I) has pulled a rabbit out of the bag this week by re-launching its Guaranteed Income and Guaranteed Growth Bonds, which were last on general sale eight years ago.
The timing is interesting and is probably an indication of what will be available to the huge number of savers in the three-year 65+ Guaranteed Growth Bonds that are due to mature from early next year.
Over £13.7 billion was deposited into these so-called Pensioner Bonds. Around 470,000 one-year bonds were purchased, which have already matured, but there were nearly twice as many three-years bonds opened (885,000), which will be maturing between 15th January and 15th May next year.
When the one-year bonds matured from January 2016, the rollover option was poor – offering 1.45%, compared to the best on the market at the time, which was 2.06% (RCI Bank)
So, how do these bonds compare to the open market today?
Well, the three-year option, is currently very competitive. Although not quite market leading, with a rate of 2.20% gross/AER the Guaranteed Growth Bond option can only be beaten by The Access Bank UK, which is paying 2.25% gross/AER.
The three-year Guaranteed Income Bond option which pays 2.15% monthly interest, is only just pipped by Atom Bank, which is offering 2.18% monthly interest – but this is only available via an app, so may not be appropriate for many savers.
The one-year option is not quite as compelling and can be easily beaten. The Guaranteed Growth Bond is paying 1.50% gross/AER, whilst the Guaranteed Income Bond is paying 1.45% gross/1.46% AER.
- See our best buy tables for a full comparison of both term options
- NS&I announce that it will pass on the full base rate rise to its savers
- See our latest Rates Rundown here
NS&I products are always extremely popular, especially for those who hold more than £85,000, as NS&I offers its unique protection that ALL money deposited with them is 100% secure, as it is backed by HM Treasury. This is in comparison to the maximum £85,000 per person, per banking licence, offered by the Financial Services Compensation Scheme.
One of the main benefits of the Guaranteed Income and Growth Bonds is the amount that can be deposited. While the Pensioner Bonds had a maximum deposit limit of £10,000 per customer, per bond and the more recently launched Investment Guaranteed Growth Bonds have an even smaller maximum of £3,000 per customer, the Guaranteed Income and Growth Bonds have a maximum deposit of £1 million per issue, per person – and this is all completely secure.
Another feature that these bonds offer, compared to the majority of the rest of the fixed rate bond savings market, is the fact that there is access to the money within the term, although with a penalty equivalent to 90 days gross interest.
All things considered, these accounts are more in line with the market than some previous offerings and gives food for thought for those that are keen to stick with the NS&I safety net, especially if they need a monthly income.
While not reaching the giddy heights of the hugely popular Pensioner Bonds, at least there are now options that are broadly in line with the market.