New 4% Pensioner Bonds Election Bribe - Grab it While You Can

By: Nadeem_Walayat

The government in a blatant election bribe for the over 65 pensioner grey vote has today put on sale the 65+ Guaranteed Growth Bonds issued through the NS&I that pay 2.8% for 1 year and 4% for 3 years (gross). Demand has been heavy all day which means website / application access has been sporadic resulting in server error pages. However there is nothing on the market that comes anywhere near matching the 3 year bonds so do persist as the issue could be fully subscribed within a couple of weeks, thereafter the risk is that the government might not release a second tranche (election bribe).

As a comparison the best 1 year fixed rates average about 1.8% and the best 3 year fixed rates average about 2.4% gross!. So these bonds are paying 60% premium to the market rate, hence why they are an election bribe. Therefore the £10 billion tranche converts into a potential bribe of at least £500 million as the NS&I usually tends to under pay market rates.

• For 65+ only
• Invest between £500 to £10k
• Interest is taxable.
• 1 year pays 2.8% gross (2.24%net)
• 3 year pays 4% gross (3.2% net)
• Fixed rate term bonds

As mentioned earlier, if you miss applying for the current £10 billion offering then there is a better than 50% chance that the Government will make an additional tranche available later on as the purpose of these bonds is literally to BUY VOTES, especially as NS&I rates tend to be at the bottom end of the market i.e. the 5 year Issue 102 fixed rate bond carries a rate of 1.6% gross.

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By Nadeem Walayat

http://www.marketoracle.co.uk

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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

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