MSE News: Government unveils Pensioner Bond rates – and they're market-leading

Options
2

Comments

  • Pincher
    Pincher Posts: 6,552 Forumite
    Combo Breaker First Post
    edited 13 December 2014 at 2:19PM
    Options
    I don't think they want to give anybody 4% at all, since the Treasury can borrow at around 1.3% the last I heard.


    Election year bribe?


    So if you are waiting for tranche 2 after the election, you might have five years to wait.


    I missed out on the three year Index Linked Bond, which would have been good, now that one has matured already. Where's the follow-on? Not that I would bother with inflation + 1% these days. What with petrol prices going down, and the airlines already reducing their prices based on lower fuel bills, inflation could suddenly go negative.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Options
    Pincher wrote: »
    I missed out on the three year Index Linked Bond, which would have been good, now that one has matured already. Where's the follow-on? Not that I would bother with inflation + 1% these days. What with petrol prices going down, and the airlines already reducing their prices based on lower fuel bills, inflation could suddenly go negative.

    Negative inflation is good for an ILSC, since it doesn't track inflation when it turns negative. So (-2%) inflation plus interest of +1% gives you a real return of 3% p.a. Trebles all round.
    Free the dunston one next time too.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Options
    Pincher wrote: »
    I have been eyeing annuities with a new perspective.


    Having a small pension pot means that it is irrelevant to retirement planning, but I still have to think about what to do with it. Assuming it was £25k .....
    On the other hand, if I used the £25k to get an annuity, I could get 6% on £25k! The drawback is of course I will never see the capital again, which is OK for those with no children.


    6% on £25k, vs 3.6% on £20k, hmm....

    Surely you'd take your 25% lump sum first?
    Free the dunston one next time too.
  • tina_ward
    Options
    Why call them pensioner bonds if there is a limited issue and therefore not available to all those over 65, additionally as previously mentioned this discriminates against those women who became pensioners from 60+ under the sliding scale. This adds insult to injury as not only did those on the scale fully expect to be able to retire at age 60 but had to work additional months/years before their pension became available, now they cannot avail of the pensioner bond until they are 65. Age discrimination!
  • PeacefulWaters
    Options
    tina_ward wrote: »
    Why call them pensioner bonds if there is a limited issue and therefore not available to all those over 65, additionally as previously mentioned this discriminates against those women who became pensioners from 60+ under the sliding scale. This adds insult to injury as not only did those on the scale fully expect to be able to retire at age 60 but had to work additional months/years before their pension became available, now they cannot avail of the pensioner bond until they are 65. Age discrimination!

    And it wouldn't be sex discrimination to let women have them at 62, would it?

    There has to be a line. Sometimes you win, sometimes you don't.
  • mgdavid
    mgdavid Posts: 6,706 Forumite
    First Anniversary Name Dropper First Post
    Options
    tina_ward wrote: »
    Why call them pensioner bonds if there is a limited issue and therefore not available to all those over 65, ......

    they are absolutely going to be available to all over 65s. If people do not organise themselves to be ready to apply for them as soon as they are on issue then that is down to the individual, not the state.
    The questions that get the best answers are the questions that give most detail....
  • Pincher
    Pincher Posts: 6,552 Forumite
    Combo Breaker First Post
    Options
    kidmugsy wrote: »
    Surely you'd take your 25% lump sum first?



    That still leaves the 75% exposed to top rate of tax.


    Even on the 25% draw down that is tax free, it could have been earning 6% if you bought an annuity. To get 4% instead actually means you lose 6% over the three years of the lock-in.


    Obviously, for money not inside a pension pot, and is chasing best interest, 4% is bloody good.


    I'm just saying, if people did a draw down, thinking they will put the money into pension bonds, and not spend it, it's not very smart.


    I suppose if you want to pass it on as inheritance, it might make sense. Leaving it inside the pot, you will have to shoot yourself before you turn 75. Wonder if they will charge 55% anyway, because your death was a deliberate act of tax evasion.
  • Pincher
    Pincher Posts: 6,552 Forumite
    Combo Breaker First Post
    Options
    kidmugsy wrote: »
    Negative inflation is good for an ILSC, since it doesn't track inflation when it turns negative. So (-2%) inflation plus interest of +1% gives you a real return of 3% p.a. Trebles all round.


    So, if I kept the money under my mattress, I would make 2%.
    Interesting way of looking at it. However, if I could get 1% from Nationwide in an instant access account, there would be no three year lock-in, for the same return.


    It's the same old tracker or fixed mortgage dilemma, when to fix, and when to track.
  • JezR
    JezR Posts: 1,697 Forumite
    First Anniversary First Post
    Options
    tina_ward wrote: »
    Why call them pensioner bonds if there is a limited issue and therefore not available to all those over 65, additionally as previously mentioned this discriminates against those women who became pensioners from 60+ under the sliding scale. This adds insult to injury as not only did those on the scale fully expect to be able to retire at age 60 but had to work additional months/years before their pension became available, now they cannot avail of the pensioner bond until they are 65. Age discrimination!

    They aren't officially called 'pensioner bonds'; that is just a shorthand that has been used. They are bonds for anyone who are at least 65 years old, nothing to do with receiving any pension.

    As the NS&I page says: 'In January 2015 we’re launching new Bonds for investors aged 65 and over. These are the Bonds announced by the Chancellor in his March 2014 Budget statement. You might have read about them in the newspapers, referred to as ‘pensioners bonds’.'
  • Ectophile
    Ectophile Posts: 7,381 Forumite
    First Anniversary Name Dropper First Post
    Options
    There's an election coming up, and the government knows who are the people who are most likely to vote - pensioners. So they offer a bribe in the form of extra-high interest rates for those of pensionable age only.

    Young people saving for their first house can't have if because large numbers of young people don't bother to vote.
    If it sticks, force it.
    If it breaks, well it wasn't working right anyway.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.8K Banking & Borrowing
  • 250.3K Reduce Debt & Boost Income
  • 450K Spending & Discounts
  • 235.9K Work, Benefits & Business
  • 609K Mortgages, Homes & Bills
  • 173.4K Life & Family
  • 248.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards