Business

Pensioners urged to hurry to beat bond deadline

older couple Image copyright Thinkstock

Millions of people aged 65 and over are being urged to sign up for so-called pensioner bonds before Friday evening's deadline.

National Savings & Investments (NS&I) is taking on extra staff to cope with the expected increase in demand.

The bonds became the fastest-selling financial product in UK history when they launched in January this year.

The 65+ bonds offer exceptionally high savings rates compared to others in the market.

The one year product pays investors 2.8% interest before tax, and the three year product pays 4%.

The total amount available was originally £10bn, but that limit was later removed by the chancellor, George Osborne.

Instead the offer will expire at midnight on Friday 15th May.

The latest figures - released in March - show that 825,000 pensioners have bought the bonds; however a total of around 10m people could be eligible.

'Rush'

In comparison to the 2.8% interest rate on the one year bond, the next best available rate on the market is 1.9%, from online bank FirstSave.

While the four-year bond pays 4%, the next best rate is from Paragon Bank, which pays 2.5%.

"If you are eligible, and you haven't yet invested, I'd suggest going online as soon as possible," said Charlotte Nelson of Moneyfacts.co.uk.

"It's better than an ISA. I would rush now," she said.

However critics of the bonds have said they represent poor value for tax-payers, who are passing on an over-generous subsidy to pensioners.

NS&I has previously warned customers to be wary of scammers offering to sell the bonds.

In particular it warned about emails from someone called Kevin Archer, posing as someone from NS&I.

Investments in 65+ bonds are limited to £10,000 per person per product - in other words £20,000 for both the one and three-year products.

Applicants must be at least 65 , and have at least £500 to invest.

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