What are your options if you have a maturing Pensioner Bond or other cash lump sums?

Back in 2015 National Savings & Investments, the providers of government-backed savings products including Premium Bonds, offered a three year fixed term Pensioner Bond for over-65s with an interest rate of 4%.  This was a much higher rate than any other cash savings on the market and was, predictably, very popular.  In total nearly 900,000 people took out a Pensioner Bond.  The three year term is now coming to an end for these savers, with their bonds maturing between January and May this year.

If you have a maturing Pensioner Bond or any other cash lump sums, you’ll find that interest rates are just as low now as they were in 2015.  Unfortunately it won’t be possible to replicate the 4% interest in any other cash account.  So what are your options?

The default option being offered by NS&I is a three-year Guaranteed Growth Bond with a fixed rate of 2.2% interest.  Elsewhere in the market, the best buy for a three-year fixed rate account at the time of writing is marginally higher at 2.25%.

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Another alternative is to invest the money for better returns.  The returns, however, would not be guaranteed.  The suitability of this option therefore depends on whether you are happy to take investment risk and can afford to do so.  The length of time you plan to leave your money invested is also important.  We suggest at least five years for stock market investments to help weather out any short term volatility (ups and downs in the market).  However, it must be noted that any investment can go down as well as up in value.  If you are interested in the potentially higher returns offered by investing your cash we suggest speaking to a financial adviser.

Richard Higgs, Chartered Financial Planner at Wealth West Ltd, provides friendly financial advice in BS9 on a face-to-face basis in the comfort of clients’ own homes.  He specialises in advising retired clients on savings, investments, Inheritance Tax and long-term care planning.  He can be reached on (0117) 3636211 or richard@haroldstephens.co.uk



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