The government backed pension bond scheme announced by the government last March will be extended to the end of May, George Osborne has said.
Under the scheme, pensioners have, since January, been able to buy bonds that offer competitive interest rates of up to 4 per cent.
The Chancellor said that the scheme is being extended to May because it has been ‘immensely successful and popular.’ The deadline for buying pension bonds will now be one week after the general election.
More than 600,000 people over the age of 65 have already signed up and £1 billion were sold in the first two days of the scheme alone.
The one year bond available pays an annual interest rate of 2.8 per cent, while the three year bond pays 4 per cent. Interest will be added annually on the anniversary of the investment. Pensioners are limited to investing £10,000 in each bond, an individual limit of £20,000.
The best one year bond available to everyone is currently offering 1.85 per cent interest and the best three year bond pays 2.5 per cent, 1.5 per cent below the pension bond.
National Savings and Investments currently offer up to £10 billion worth of bonds but George Osborne said that this will be extended to £15 billion.
The scheme is not without its critics, however. Some experts have been saying that it is not fair that younger people are subsidising a scheme from which only well-off pensioners can benefit.
Director General of the Institute for Economic Affairs, Mark Littlewood, said that the scheme proves that the British public is not ‘all in it together.’ Pension bonds are nothing more than a gimmick, he said, that benefits wealthy pensioners at the expense of the working age population.
