New pensioner bonds 'snapped up'
The Government's new market-leading pensioner bonds have proved "extremely popular" in their first day of going on sale with thousands of them being snapped up each hour, National Savings and Investments (NS&I) has said.
A pot of up to £10 billion has been put aside for the 65-plus bonds and NS&I, which has made them available through its website, said that £270 million-worth of the deals had been sold by 3.30pm.
The bonds are available online, over the phone and by post, but some consumers found themselves struggling to get on the website as well as finding the phone lines jammed as the stampede to get hold of them got under way.
A spokeswoman for NS&I said: "This has been an extremely popular launch... So far, £270 million has been invested in 26,000 sales.
"This is out of a total pot of £10 billion, the largest UK retail bond ever, so there's plenty more available. There are a lot of these popular bonds being sold today.
"But even they are only a small proportion of the overall pot available. So we'd remind customers there's no need to rush: take your time and decide what's best for you."
The deals, which have been released at a time when savers continue to be hammered by low interest rates, enable people aged over 65 years old to save up to £10,000 each in a one-year bond paying annual interest of 2.8% and a three-year bond paying a yearly rate of 4%.
Couples can jointly hold £40,000, assuming that each partner holds £10,000 in a one-year bond and £10,000 in a three-year bond.
The spokeswoman continued: "We continue to take many thousands of sales each hour online and by phone. The majority of sales are coming through our website.
"Because of the unprecedented demand for these bonds, there have been some issues with our website affecting some customers accessing it but we are working hard to correct this. Our call centres are open 24/7 and the team are working hard to help customers."
NS&I has said it expects the bonds to be available for a period of months, but some financial experts warned that the bonds "could be a case of blink and you'll miss them".
Martin Lewis, founder and editor of MoneySavingExpert.com, pointed out that as few as half a million over-65s will be able to get their hands on the bonds if everyone uses their maximum allowance.
He said: " My guess is this won't be open for more than six to eight weeks, so go quick if you want it."
NS&I has encouraged people to apply online as the "quickest and easiest" way to invest.
Some people vented their frustration at their struggle to get through to NS&I on the MoneySavingExpert website's forum.
One user said: " I just had the email from NS&I and the page link to apply is unavailable and the phone is continually busy."
Another added: "This is a joke, have been trying both phone line and website since they were announced. Getting nowhere"
And another NS&I customer commented: "Have just tried to login to NSANDI account, got right through entering my number and name, the password page came up, entered the required digits. All fine but no 'Next' box to click. Frustrated as I cannot even see my other NSANDI products."
The new bonds pay almost double the interest rates that can be found on bonds across the market generally, according to figures from website Moneyfacts.
The average one-year fixed bond on the market today pays just 1.43%, while the typical three-year bond pays 2.03%.
Susan Hannums, director of savings website Savingschampion.co.uk, said : "Our message to any savers wishing to take advantage is to act now to secure these fantastic rates, as it could be a case of blink and you'll miss them."
NS&I, which has more than 25 million customers, offers a range of cash savings and investment products, including premium bonds. It is backed by the Treasury, meaning any money invested in it has 100% security.
Generally, people who have money saved into a bank or building society in the UK are protected for up to £85,000 if their financial institution goes bust, under the Financial Services Compensation Scheme (FSCS).
Danny Cox, chartered financial planner at financial services firm Hargreaves Lansdown, said he would be "highly surprised" if the £10 billion pot lasts until the new tax year in April.
He said: " Back in 2011, the popular NS&I index-linked certificates sold £5 billion in four months before being closed."
The bonds are designed to be held for the whole term. Savers can cash them in early, although they will be hit by a penalty equivalent to 90 days' interest on the amount cashed in.
Mr Lewis suggested that even if people only want to lock away their money for one year, they should consider opting for the three-year bond.
He said: "The most important thing to understand is if you are only going to do one bond, do the three-year that pays 4%, not the one-year that pays 2.8%.
"That's because you only lose 90 days worth of interest if you withdraw early, therefore you can get the three-year bond, take your cash out after a year and you earn 3%, which beats the one-year bond."