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Critics say bond extension is a bribe

Osborne gives pensioners a pre-election savings boost

George OsbornePensioner bonds are to be extended for a further three months because of their popularity. Chancellor George Osborne confirmed today that the government-backed product for 0ver-65s offering rates of up to 4% would continue to be sold until mid-May.

More than £1bn in bonds were sold by National Savings & Investments in the first two days after they were launched last month.

Mr Osborne told the BBC’s Andrew Marr show that the bond had been “the most successful saving product this country had ever seen”.

The bonds have proved popular in a low-interest climate among those looking for something with a better rate of interest than other most other savings products.

There has been concern among critics, however, that the bonds are diverting savings from other deposit accounts which banks and building societies rely on to meet mortgage commitments.

Today there was further criticism that they were being extended as an election bribe as more older people tend to vote in elections.

Mr Osborne insisted he was on the side of savers, He said:  “We need to support savers in our country. That is one of the things that went badly wrong in Britain 10 years ago.

Bonds are available to those aged at least 65 or above who have at least £500 to invest and are seeking a fixed rate of interest, providing a guaranteed income.

There are two bonds: the one-year bond pays annual interest of 2.8% before tax, and the three-year bond 4% before tax. Interest is added each year. There is a maximum of £10,000 investment.

 

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