The new Pensioner Bond from National Savings has been launched today and as expected the demand is extremely high.
The one-year bond will pay an annual gross interest rate of 2.8% and the three-year bonds will pay 4%.
Only those aged 65 and over are eligible to invest in the bonds.
Investment will be limited to £10,000 in each bond, making a maximum of £20,000 per individual.
Investors will be subject to income tax on the earnings from their bonds, reducing the headline gains.
For those paying basic rate tax, 20% will be deducted from the interest they earn and higher rate tax payers will need to the pay extra tax.
The interest on both bonds will only be payable at the end of the term, and anyone wanting to take their money out early will lose 90 days interest.
For more information please visit the National Savings website
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