No more pensioner bonds. Where next?

If you are a Brit aged 65 or over, you may well have been online searching for one of those fabled pensioner bonds to get yourself a much better interest deal on your savings. 

Issued by the UK government’s savings arm NS&I, pensioner bonds proved to be immensely popular as deposit rates hovered barely north of zero. Lock your money away for a short fixed term of either one or three years and you were promised a much more attractive rate than you will get from traditional savings accounts. And all at no risk whatsoever.

Not surprisingly, they sold like the proverbial hot-cakes when they were launched in 2015. Desperate to make more out of their nest-eggs, retirees simply tore through the government’s £10 billion allocation.

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When UK interest rates were 0.5%, the '65+ Guaranteed Growth Bonds’ paid 2.8% for a one-year bond or 4% annually for a three-year bond.  

The pensioner bond deal was too good

Since then, however, pensioner bonds have not been reissued.  The problem was the deal was so good that the banks and building societies couldn’t compete, forcing them to basically give up and reduce rates even further on their existing products. Essentially, these bonds wrecked the UK savings market, meaning you are unlikely to see their ilk again.

The bottom line now is that if you want a better risk-free yield on your cash, you’ll have to keep your fingers crossed that central banks start to lift interest rates to a more normal level and then pray that rising inflation doesn’t send you back to where you started, or even worse. 

Inflation-slaying tontine income

Or you could try an alternative. Using your savings to buy a MyTontine pension will immediately give you a much better income rate than you normally receive from the typical online account. Then, over time, that rate will accelerate because the benefits accrued by other people who invest with you in the same tontine (a group of similar age, same sex savers) will be shared with you as they pass away. It won’t take long in the early years for your income to be beating inflation, and then in the later years it will be smashing it. 

Low-risk tontine retirement income

When you searched for a pensioner bond, security for your cash was undoubtedly high on your list of priorities. In this regard, you won’t be disappointed with our MyTontine pension because its unique structure keeps our costs so wafer-thin that we don’t have to take undue investment risk with your contributions. Furthermore, you have the peace of mind that your capital is fully ring-fenced and segregated from our operations.

Transparency was also likely to be a key reason for choosing a pensioner bond. You knew exactly the rate you would receive over your investment term and the cost of any early redemption. With a MyTontine pension, we can’t give you a guaranteed future return because it is a dynamic product with genuine potential to exceed expectations. However, you can still see with very high degree of accuracy what your income is going to be thanks to our patent-pending “robo-actuary” technology. Constantly making micro-adjustments based on the longevity profile of your fellow tontiners and the underlying investment performance of your contributions, it gives you super-accurate real-time predictions at the press of a button. And when you whip out your smartphone to check just how quickly your inflation-busting payouts are growing, you will be ecstatic that you are not shackled to a fixed rate.

Myriad advantages

Cheap, thanks to initial and ongoing charges of just one per cent, safe, thanks to tight new EU-wide pension regulation and in-built state-of-the-art security, and simple, thanks to app-based smartphone technology, the MyTontine pension is the retirement product of the future.

It can’t be overestimated how much the guarantee of a high and rising income for the rest of your life will transform your financial outlook from one of fear and trepidation to one of joy and optimism. Pensioner bonds were great, but they only put a fleeting smile on your face. Subscribe to a MyTontine pension, however, and you’ll be grinning from ear to ear for life!