Children’s bonds to be axed at NS&I

NS&I is axing its Children’s Bond for new savers in September.

More than 800,000 parents and grandparents have £500million in these bonds, saving for children until they reach 16.

National Savings & Investments has not confirmed the date these bonds will disappear and it is not clear what your options will be when your current deal ends.

The 36th issue of the bond, paying a tax-free 2pc fixed for five years, went on sale in April. The previous issue, on sale since September 2012, pays 2.5 pc. Every five years you could renew the deal for a further term until the bond reached the five-year anniversary after the child’s 16th birthday. But what happens now is up in the air.

A spokesman for NS&I told Money Mail: ‘We will write to customers before their bond matures to outline the options. It will include investment into our new Junior Isa.’

Customers with bonds maturing before the September date can still roll over into a new fiveyear term.

NS&I last week launched its first Junior cash Isa. Adults can put up to £4,128 away tax-free each year for children under 18.

The top rate is Coventry BS’s variable 3.25 pc. Nationwide, Halifax, Tesco and Darlington BS pay 3 pc.

NS&I, available online, pays 2 pc.