Pensioner Bonds / 65+ Guaranteed Growth Bonds

Ed Wilkinson -

Pensioner bonds, officially named 65+ Guaranteed Growth Bonds, which are no longer available for sale, were fixed-rate savings bonds offered by the government-backed National Savings & Investments (NS&I) for individuals aged 65 and above. These bonds were introduced in January 2015 with the intention of offering senior citizens a higher interest rate on their savings. Here are some key points to know about these bonds:

  1. Origin: They were launched by the government in January 2015, targeted at those aged 65 or older.
  2. Nature: These bonds were fixed-rate, meaning the interest rate was set at the beginning and remained the same throughout the term.
  3. Interest Payment: Interest was not paid out regularly but was added to the bond's account each year and given at the end of the term.
  4. Penalties: If bondholders withdrew any money during the bond term, they would incur a penalty equivalent to 90 days’ interest on the amount withdrawn. Furthermore, cashing in the bond within the first 90 days resulted in receiving back less than the initial investment due to the same 90-day interest penalty.
  5. Tax Implications: The interest earned from these bonds was taxable, and 20% tax was deducted at source. However, depending on one's tax bracket, they might have to pay additional tax or could claim a refund.
  6. No Cooling-off Period: It's worth noting twice that there was no cooling-off period for these bonds. If they were cashed in within the first 90 days, the return would be less than the invested amount due to the interest penalty.
  7. Change in Tax Rules: Starting 6 April 2016, there was a change in the tax rules concerning savings interest. From this date, interest started being added to these bonds without the basic-rate tax being deducted.

For more detailed information or for those who already possess one of these bonds, it's recommended to visit the official NS&I website.

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