Osborne's 'Pensioner bonds' - bribing OAPs with everyone else's money

[Ignitionnet]

Here's a really good blog that explains the subject:

http://stumblingandmumbling.typepad....ner-bonds.html

Wasting taxpayers' money doesn't sound much like conservatism to me, especially in light of Osborne spending the past 5 years banging on about austerity and waste.

Using taxpayers' money to buy votes from a certain client group, however, sounds like corruption to me?

Subsidising the savings rates of those who are able to invest £20,000 from general taxation also sounds like a transfer of wealth from the taxpayer in general to those who are on the wealthier end of the spectrum.

All in all a despicable policy hiding behind soundbites and the now very much disproven idea that all pensioners are on the brink of starving and/or freezing to death, despite their being the only group who have seen their incomes rise in real terms over the past 5 years, and being the only age-group besides the 55-64 age-group to see home ownership rates increase.

If this were open to everyone then, yeah, maybe. Still regressive but at least not as corrupt. If this were not in existence at all and the government stopped messing with interest rates on savings and borrowing via giving banks cheap cash so that they don't have to pay decent rates of interest on savings, awesome.

Originally Posted by Ignitionnet

Using taxpayers' money to buy votes from a certain client group, however, sounds like corruption to me?

Sounds just like every other election year since ever to me ...

[Ignitionnet]

Originally Posted by Chris

Sounds just like every other election year since ever to me ...

Ah that's alright then.

Originally Posted by Ignitionnet

Ah that's alright then.

No, it isn't. It's just not surprising.

Blair/Brown identified a middle class client group and bought its votes with tax credits. Cameron/Osborne have identified retired boomers and are attempting to buy theirs.

[Ignitionnet]

Originally Posted by Chris

No, it isn't. It's just not surprising.

Blair/Brown identified a middle class client group and bought its votes with tax credits. Cameron/Osborne have identified retired boomers and are attempting to buy theirs.

I kinda got the economic point with tax credits - they arrested the GINI increase somewhat and hence ensured there was more money flowing around the economy. This, however, has no economic case I'm aware of that can be made for it.

I welcome education on this matter.

And do we really think there are half a million pensioners with £20k spare a year around?

[Ignitionnet]

Originally Posted by Hugh

And do we really think there are half a million pensioners with £20k spare a year around?

Seems that way.

http://www.independent.co.uk/news/bu...s-9979409.html

Rachel Springall, a spokeswoman for Moneyfacts, told the Press Association that applying online could be the quickest way to get your hands on a pensioner bond.

"These deals will be taken up very quickly. Pensioners could be cashing in their current savings pots to invest in these new bonds, as both the high rates and link to the NS&I will be seen as an attractive proposition for them," she said.

http://www.dailymail.co.uk/news/arti...s-website.html

Telling savers not to panic, NS&I insisted the fixed-rate bonds would not sell out – saying it would be several months before sales reach the Treasury's £10billion limit.

But financial experts said they could go within weeks or even days, warning it could be a case of 'blink and you'll miss them'.

Susan Hannums, at comparison website Savingschampion.co.uk, said: 'Experts have been warning NS&I for months that demand for the long awaited pensioner bonds would be high.

http://www.telegraph.co.uk/finance/p...-to-apply.html

How great is the danger that Pensioner Bonds will run out before I can invest?

Savings rates analysts have urged savers to apply quick as the bonds are expected to be extremely popular.

Anna Bowes, of Savings Champion, the rate monitoring website, said she expects them to “fly off the shelves”.

So that's NS&I saying they'll sell out, 'financial experts', 'savings rates analysts, Moneyfacts and Savings Champion just from a 5 minute Google.

So, yes, it certainly does appear that there are half a million pensioners with the required capital. Joys of being on the good side of the housing market, final salary pension schemes, etc.

EDIT: Hugh - here's a thought. There are mortgage deals out there that are considerably lower than this 4% rate that the Chancellor is using our taxes to subsidise. If you were a homeowner using equity release or extending your mortgage to invest in this scheme would deliver a profit. A taxpayer subsidised profit. How insane is that?

Originally Posted by Chris

No, it isn't. It's just not surprising.

Blair/Brown identified a middle class client group and bought its votes with tax credits. Cameron/Osborne have identified retired boomers and are attempting to buy theirs.

It's not working on me.

Can pensioners cash in their pension pots yet? They could do that....

4% is really good though.

Before tax.....

Some ISAs have upped their rates (non-taxable) to compete.

[Ignitionnet]

Originally Posted by Damien

Can pensioners cash in their pension pots yet? They could do that....

4% is really good though.

Whole bunch of options. 4% risk free with things as they are right now? Who wouldn't find a way to liquidate some other assets to invest on that basis?

Can I just point out the 4% interest on £20k per year, after tax, is £640 (20% tax rate) and £480 (40% tax rate) - or £12.31 / £9.23 per week.

Wrinkly boomers wouldn't be exactly living high on the hog on that extra income, will they?

[Ignitionnet]

Originally Posted by Hugh

Can I just point out the 4% interest on £20k per year, after tax, is £640 (20% tax rate) and £480 (40% tax rate) - or £12.31 / £9.23 per week.

Wrinkly boomers wouldn't be exactly living high on the hog on that extra income, will they?

Quite - which begs the question of why George Osborne is offering up potentially ~£300 million per year of taxpayers' cash in extra interest costs over the gilt market subsidising it.

Money that should be circulating around the economy will, instead, be subsiding low-risk, subsidised investment in government bonds which makes a bit of a mockery of low interest rates in the name of encouraging riskier investment and increasing the flow of money through the economy.

The Chancellor has never been an economist but always an astute politician and this is another of his policies that is economically illiterate but most definitely a smart political move.

Whether the economy of a nation should be run based on politics rather than economics is another debate, though that's perhaps misusing the word 'debate'.

Interest rates are puny everywhere..I'm very peeved at the Post Office who have just reduced the interest rates on the lump sum I deposited two months ago.

[Sirius]

Originally Posted by Damien

Can pensioners cash in their pension pots yet? They could do that....

4% is really good though.

I intend to cash in on some of mine in March, then sponge off the state pension at 65 in the same way that the will not work and have never worked types do with benefits now. I will still have one private,my state and full army pension