We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies as per our policy which also explains how to change your preferences.

NS&I slashes Guaranteed Growth and Income bond rates

Treasury-backed organisation has to cut rates to meet financing targets

National Savings and Investments (NS&I) has cut the interest rate on its three-year Guaranteed Growth and Income bonds by 0.25%.

The treasury-backed savings provider says it’s had to tweak the rates because of their popularity since they were relaunched in December 2017.

Which? takes a look at what the change means for savers with maturing NS&I ‘pensioner bonds’ and how the new rates compare.


What’s changing?

NS&I is cutting the rate on its three-year Guaranteed Growth Bond from 2.2% to 1.95% AER, and the rate on its three-year Guaranteed Income Bond from 2.17% to 1.92% AER.

Current Issue (Issue 56) New Issue (Issue 57) Effective from
Guaranteed Growth Three-Year Bond 2.2% gross/AER 1.95% gross/AER 6 March 2018
Guaranteed Income Three-year Bonds 2.15% gross/2.17% AER 1.9% gross/1.92% AER 6 March 2018

Source: NS&I

However, the rate on the one-year terms of both the growth and income products will remain unchanged at 1.5% AER and 1.46% AER respectively.

Investment Guaranteed Growth Bonds will remain on sale until 10 April 2018 at the rate of 2.2% gross/AER, fixed for three years.

These bonds are open to people aged 16 and over and have a minimum investment of £100 and a maximum investment of £3,000.

Why has NS&I cut the rates so soon?

NS&I relaunched Guaranteed Growth Bonds and Guaranteed Income Bonds just over three months ago on 4 December 2017.

But it says it now needs to cut rates thanks to their popularity.

NS&I has a Net Financing target so needs to tweak rates on products to ensure it doesn’t exceed or fall short of this mark.

The target for 2017-18 was revised in the Autumn Budget on 22 November 2017 to £8bn, with room £3bn either side of this, from £5bn to £11bn.

Jill Waters, retail director at NS&I, said: ‘It is always a difficult decision to reduce rates but these changes will allow us to manage demand in order to achieve our Net Financing target, while continuing to deliver positive value to taxpayers.

‘The new rates present a fair offer, and customers continue to benefit from a high holding limit and 100% security on all deposits.’

What it means for you

If you have a maturing three-year Guaranteed Growth Bond or 65+ Guaranteed Growth Bond (commonly known as ‘pensioner bonds’) you don’t need to worry.

You will be able to roll over your investment for another three-year term at a rate of 2.2% AER as stated in your maturity pack – the change only applies to new customers.

However, this doesn’t mean you should necessarily settle, as there may be a better rate for your cash or you may prefer to fix for a shorter or longer period.

You can find the best deals across easy-access and fixed-rate bonds using Which? Money Compare. We’ve picked out the top-paying deals for deposits across a range of terms below.

Type of deal Rate (AER) Minimum deposit
RCI Freedom Savings Account Easy-access account 1.3% £100
Masthaven One-Year Fixed Rate Bond One-year fixed-rate bond 1.9% £500
Ikano Bank Two-Year Fixed Saver Two-year fixed-rate bond 2.1% £1,000
Ikano Bank Three-Year Fixed Saver Three-year fixed-rate bond 2.26% £1,000
Vanquis Bank Four-Year Fixed Rate Bond Four-year fixed-rate bond 2.42% £1,000
Ikano Bank Five-Year Fixed Saver Five-year fixed-rate bond 2.52% £1,000

Source: Which? Money Compare

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

Back to top