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    • Former MSE Helen
    • By Former MSE Helen 12th Dec 14, 3:07 PM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Government unveils Pensioner Bond rates and they're market-leading
    • #1
    • 12th Dec 14, 3:07 PM
    MSE News: Government unveils Pensioner Bond rates and they're market-leading 12th Dec 14 at 3:07 PM
    "Pensioner Bonds will pay market-leading rates of 2.8% on a one-year bond and 4% on a three-year bond from January 2015..."

    Read the full story:

    Government unveils Pensioner Bond rates and they're market-leading




    Click reply below to discuss. If you havent already, join the forum to reply. If you arent sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • PennyForThem
    • By PennyForThem 12th Dec 14, 3:14 PM
    • 585 Posts
    • 532 Thanks
    PennyForThem
    • #2
    • 12th Dec 14, 3:14 PM
    • #2
    • 12th Dec 14, 3:14 PM
    With Santander - can't see me changing for this
    • kidmugsy
    • By kidmugsy 12th Dec 14, 8:03 PM
    • 12,480 Posts
    • 8,852 Thanks
    kidmugsy
    • #3
    • 12th Dec 14, 8:03 PM
    • #3
    • 12th Dec 14, 8:03 PM
    With Santander - can't see me changing for this
    Originally posted by PennyForThem
    Happily, you are allowed to do both.
    • apt
    • By apt 12th Dec 14, 10:21 PM
    • 3,087 Posts
    • 1,750 Thanks
    apt
    • #4
    • 12th Dec 14, 10:21 PM
    • #4
    • 12th Dec 14, 10:21 PM
    With Santander - can't see me changing for this
    Originally posted by PennyForThem
    Does Santander pay 4% interest?
    • Pincher
    • By Pincher 13th Dec 14, 4:33 AM
    • 6,516 Posts
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    Pincher
    • #5
    • 13th Dec 14, 4:33 AM
    • #5
    • 13th Dec 14, 4:33 AM
    I had some shares that got converted into Santander shares, small potatoes, so didn't think much of it. Over the last five years or so, 500 worth of shares was yielding 40 worth of dividend, 8%!


    Funny set up, you can choose to receive shares (scrip dividend) or cash. Analysts say Santander would be in trouble if everybody wanted cash, because they are paying out more than their profit.
    So no risk, no gain.
    • torbrex
    • By torbrex 13th Dec 14, 5:51 AM
    • 61,883 Posts
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    torbrex
    • #6
    • 13th Dec 14, 5:51 AM
    • #6
    • 13th Dec 14, 5:51 AM
    Do pensioners really want to tie up their cash for 3 years?
    I would have thought they would prefer a monthly income from their savings, I know that I will be looking for that when I retire.
    I will be finished with all the long-term investment stuff and looking for a regular income and access to cash if I need it.
    • PeacefulWaters
    • By PeacefulWaters 13th Dec 14, 6:26 AM
    • 8,316 Posts
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    PeacefulWaters
    • #7
    • 13th Dec 14, 6:26 AM
    • #7
    • 13th Dec 14, 6:26 AM
    Do pensioners really want to tie up their cash for 3 years?
    Originally posted by torbrex
    If they're not going to need it for three years (perhaps because they have capital elsewhere), then why not? The life expectancy of an average 65 year old is a lot longer than three years.

    I would have thought they would prefer a monthly income from their savings, I know that I will be looking for that when I retire.
    You are making the mistake of pigeonholing pensioners. Many have an excess of income and don't need any more.

    I will be finished with all the long-term investment stuff and looking for a regular income and access to cash if I need it.
    But others will take a different approach.
    • torbrex
    • By torbrex 13th Dec 14, 6:46 AM
    • 61,883 Posts
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    torbrex
    • #8
    • 13th Dec 14, 6:46 AM
    • #8
    • 13th Dec 14, 6:46 AM
    If they're not going to need it for three years (perhaps because they have capital elsewhere), then why not? The life expectancy of an average 65 year old is a lot longer than three years.
    Originally posted by PeacefulWaters
    Not every one is the same I realise that, I was generalising.
    You are making the mistake of pigeonholing pensioners. Many have an excess of income and don't need any more.
    Not every one is the same I realise that, I was generalising.
    But others will take a different approach.
    and yet more will have no spare cash to speak of at all, I realise that, I was generalising.
    • Pincher
    • By Pincher 13th Dec 14, 7:23 AM
    • 6,516 Posts
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    Pincher
    • #9
    • 13th Dec 14, 7:23 AM
    • #9
    • 13th Dec 14, 7:23 AM
    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, drawing down would actually mean paying tax, possibly at the top rate, since I have other income. So 25k becomes 20k. If I then invest it in this pension bond, 10k at 2.8%, 10k at 4%, I would get the equivalent of 3.6% on the 20k, on which I have to pay tax.


    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....
    • br1anstorm
    • By br1anstorm 13th Dec 14, 11:32 AM
    • 217 Posts
    • 60 Thanks
    br1anstorm
    Pensioner Bonds - age, dates and deadlines
    The Pensioner Bonds look like an attractive opportunity for some..... including me. I have signed up for the email notifications.

    We now know the terms (one year or three), and the interest rates. We know they will be offered for sale "in January". Okay - could be the 1st or the 31st. Whatever the date, it seems to be assumed that there will be heavy demand and that the offer might be closed once the Government's target, or limit, is reached.

    Now ..... I turn 65 in early February. Will I be able to invest in these bonds on - or after - my birthday? Can I make an advance reservation whenever the January date is announced, for purchase/delivery of the bonds on my 65th birthday in February? Or will I miss out because they'll all be sold out a few days before I hit 65?

    It looks rather as if this kind of deadline-exercise by NS&I will be a bit like Black Friday in the supermarkets. Is this really a sensible way for the government to market savings?
    • John Gray
    • By John Gray 13th Dec 14, 12:00 PM
    • 5,439 Posts
    • 3,227 Thanks
    John Gray
    You can only invest in these Bonds when you are aged 65 or over. So if they aren't all sold out by your birthday, buy then!

    The Govenment, and their hench-persons NS&I, only wants to get in a certain amount of money by this scheme, hence they point out that once they have taken in that amount of money, the scheme will close.
    • Pincher
    • By Pincher 13th Dec 14, 12:12 PM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    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.
    Last edited by Pincher; 13-12-2014 at 12:19 PM.
    • kidmugsy
    • By kidmugsy 13th Dec 14, 4:06 PM
    • 12,480 Posts
    • 8,852 Thanks
    kidmugsy
    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.
    Originally posted by Pincher
    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.
    • kidmugsy
    • By kidmugsy 13th Dec 14, 4:08 PM
    • 12,480 Posts
    • 8,852 Thanks
    kidmugsy
    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....
    Originally posted by Pincher
    Surely you'd take your 25% lump sum first?
    • tina ward
    • By tina ward 13th Dec 14, 4:55 PM
    • 1 Posts
    • 0 Thanks
    tina ward
    Age discrimination
    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
    • By PeacefulWaters 13th Dec 14, 5:21 PM
    • 8,316 Posts
    • 10,685 Thanks
    PeacefulWaters
    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!
    Originally posted by tina ward
    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
    • By mgdavid 13th Dec 14, 5:28 PM
    • 6,221 Posts
    • 5,661 Thanks
    mgdavid
    Why call them pensioner bonds if there is a limited issue and therefore not available to all those over 65, ......
    Originally posted by tina ward
    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
    • By Pincher 13th Dec 14, 6:50 PM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    Surely you'd take your 25% lump sum first?
    Originally posted by kidmugsy


    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
    • By Pincher 13th Dec 14, 7:12 PM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    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.
    Originally posted by kidmugsy

    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
    • By JezR 14th Dec 14, 9:27 AM
    • 1,582 Posts
    • 1,123 Thanks
    JezR
    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!
    Originally posted by tina ward
    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 were 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.'
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