Pensioner bonds saving rates are slashed by half

OLDER savers who invested in the Government’s hugely popular “pensioner bonds” will have their returns halved within weeks after the scheme was axed.

In a surprise move, the Government has discontinued the bonds, which were designed to encourage saving among over-65s by offering market-leading returns over one or three-year periods.

From today, some 470,000 savers with cash invested in the oneyear pensioner bond will be given 30 days to move their money to another account, or face a 49 per cent interest rate cut from 2.8 per cent to 1.45 per cent.

The new rate is outside the top 10 one-year bonds available on the market and is 0.7 percentage points lower than the top-paying one-year bond from United Trust Bank, which pays 2.15 per cent. Andrew Hagger, the founder of

Moneycomms, a savings website, said: “I am in shock. Many savers may feel like they have been missold pensioner bonds as they expected them to pay out good rates for years to come.”

The scheme was part of Chancellor George Osborne’s 2014 “Budget for Savers”. Some 1.1 million people have invested £13.7 billion, making the bonds the best-selling retail financial product in modern British history.

A spokesman for National Savings & Investments said it could not guarantee the three-year pensioner bonds, which pay 4pc a year, would be reissued upon maturity in January 2018.