Returns for “pensioner bonds” issued by the Government are set to plummet by almost half.
The bonds were issued by the Government in two tranches from January this year, with the first set to mature next month.
However, because the products were a special issue, while savers were offered an interest rate of 2.8 per cent on investment earlier this year, those who roll over their savings into a standard guaranteed growth bond next month will now get just 1.45 per cent.
The bonds were introduced by Chancellor George Osborne as part of the 2014 Budget in a bid to encourage saving among over-65s.
As well as the one-year bonds which will begin to mature next month, investors were also offered a three-year bond, which pays 4 per cent interest to January 2018.
An NS&I spokesman says: “65+ Bonds were a special Issue designed to support older savers over a 1-year or 3-year investment term. As with all our standard products, the interest rates on NS&Is Guaranteed Growth Bonds are set to balance the interests of savers, taxpayers and the wider market whilst offering a 100 per cent guarantee.”