NS&I (National Savings & Investments) has confirmed that customers who hold 1-year 65+ Guaranteed Growth Bonds, which were commonly known as “Pensioner Bonds”, will have the option to reinvest into NS&I’s standard 1-year Guaranteed Growth Bond, reinvest into a 2, 3 or 5-year Guaranteed Growth Bond, or cash in their investment on maturity.  Customers can choose one, or any combination, of these three options.

The rates available on re-investment are sadly far short of the original rates:

• 1-year  1.45% gross/AER (2014 rate: 2.8%)
• 2-year 1.70% gross/AER
• 3-year 1.90% gross/AER (2014 rate 4.0%)
• 5-year 2.55% gross/AER

For reference, the best one-year fixed rate bond available from a banking institution with the full FSCS protection is 2.15% AER, from United Trust bank, whilst the best “high street bank” rate is 1.7% AER from Yorkshire bank.

The best available three-year rate is 2.73% AER from First Trust bank, and the best “high street bank” rate is again from Yorkshire Bank, at 2.4% AER.

Not only are the new NS&I rates far below the original rates, but they are also no longer competitive compared to other options available, and most clients would be well-advised to look elsewhere on maturity.

As always, please feel free to get in touch if you have any questions.