It seems only 12 months ago ...23 November 2015
The terms of each offering (1 year fixed and 3 year fixed / maximum investment £10,000 each) were much anticipated in December 2014 by the over 65s, although the eventual launch was delayed until 15 January 2015 (and closed by 15 May 2015). The allocations of both investment offerings were quickly filled and it is of note that many in the 1 year fixed bonds are now receiving notice of the upcoming maturity of these plans in January 2016. No information has yet been provided regarding any alternative offers from NS&I, and with the recent announcement of reduced interest rates on the NS&I Direct ISA savings accounts, it will be interesting to see if new offers (if any) are in line with falling market trends.
Full details of the Pensioner Bond offer (no longer on sale) are here: http://www.nsandi.com/65-guaranteed-growth-bonds
It is also important to remember that the interest return on both durations of Pensioner Bonds is paid net. Therefore, tax will need to be accounted for in planning your personal finance if you are a higher rate taxpayer and you may need to add this income on to any HMRC tax return you prepare.
If you decide that any offer from National Savings with your matured Bond proceeds is not for you, what alternatives do you have? Chapters Financial has some suggestions:
- ISAs: we would recommend that you use your tax-efficient ISA allowance every tax year if affordable. This can be in the form of a stocks & shares ISA, a cash ISA or a balance between the two, depending on your attitude to investment risk and the length of time you plan to invest. The ISA allowance in the current tax year (2015/2016) is £15,240, with a new slightly increased ISA allowance available in the new tax year (2016/2017).
- State Pension top-up: if you are already drawing the State Pension, or will be entitled to do so before 06 April 2016, you have the opportunity to 'buy' between £1 and £25 of extra State Pension. This opportunity is time-bound, running for 18 months only, from 12 October 2015 to 05 April 2017. Visit our blog here for further information on topping up your State Pension: http://www.chaptersfinancial.com/the-state-pension-–-changes-and-options.html and get in touch with the Chapters Financial team if you would like to explore whether this option would be beneficial in your circumstances.
- Premium Bonds: As Premium Bonds are offered by NS&I, the value of your investment is secure and access to your funds is prompt (usually a week to ten days). The maximum investment into tax-free Premium Bonds is currently £50,000 per individual. There are no tax free 'winnings' in the first calendar month and you will be entered into the monthly draw thereafter. The current minimum win is £25.00 and the largest winning is £1M per month (two £1M prizes are available each month). The annual prize fund winnings return is currently approximately 1.35% gross per annum (not guaranteed). This level of return is competitive for both basic and higher rate tax payers.
As you can see, this is not an exhaustive list and we believe that taking advice on your funds to make them work hard is usually vital to make the most of what you've got. Please note that no individual advice is provided in the text of this blog.
The team at Chapters Financial has significant experience in being able to help with investment and savings planning. This may become very relevant as we approach the end of the tax year. Contact us at our Guildford or Woking offices to discuss the needs you have in your circumstances.
Keith Churchouse FPFS
Chartered Financial Planner
Certified Financial Planner
ISO22222 Personal Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.