Synopsis: The latest NS&I annual report shows that Pensioner Bonds sold more than expected.

National Savings & Investments (NS&I) has just published its latest report and accounts for the year ending 31 March 2015. These show that NSI raised £18.2bn last year against £3.4bn in 2013/14.

NS&I’s original financing target for 2014/15 had been £13bn ±£2bn, a figure announced at the time of the 2014 Budget to allow for an expected increased inflow from increased premium bond limits and the 65+ Guaranteed Growth Bonds (aka Pensioner Bonds). At the time the Chancellor had said he would be ‘allowing inflows of up to £10bn’ for the Pensioner Bond.

In the Autumn Statement – before the Bonds were launched – the Chancellor nudged up the central number of the range to £13.5bn. Then in the March Budget – with an election looming – Mr Osborne decided that Pensioner Bonds would remain on sale, regardless of how much they raised, until 15 May (8 days after the polls closed). The NS&I accounts show that by the end of March the Bonds had raised just over £11bn.

In earlier Bulletins we have commented on the fact the these bonds were an expensive way for the government to raise money and this point has been underlined in the numbers produced by NS&I. One of NS&I yardsticks is a ‘Value Indicator’, which is a measure of NS&I’s cost-effectiveness in raising finance. It compares the total cost of delivering NS&I’s financing and servicing existing customers’ deposits with how much it would cost the Government to raise funds through the wholesale market via equivalent maturity gilts. The Pensioner Bonds are specifically excluded in calculating the Value Indicator…

Perhaps surprisingly, Pensioner Bonds were not the largest source of new monies for NS&I in 2014/15: that title goes to Premium Bonds, which attracted £12.3bn from savers/punters. However, there was also a £6.7bn outflow as premium bond holders cashed in, so Pensioner Bonds comfortably took the net inflow prize.


NS&I’s target for 2015/16 is to raise £10bn ±£2bn. To judge by last year’s performance, it will now be relying heavily on premiums bonds to achieve this figure. It is worth noting that these sales will all be direct from 1 July as NS&I’s final link with the Post Office – selling premium bonds over the counter – ends on that date.

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