How to get a Pensioner Bond

Pensioner Bonds are an exclusive investment for the over-65s with a rock solid government guarantee and market-beating rates of interest. But how can you get them?

When are Pensioner Bonds available?

They won’t be available until January and we won’t be told the exact day on which applications open until that day actually dawns.

For that reason, it’s a good idea to register on the National Savings & Investments website, if you haven’t already, to receive the information. Here is the link.

Which is the best way to apply?

When the day comes in January, you will have the choice of applying over the internet (via National Savings), by phone or by post.

There could be a rush to apply, so the postal method could take too long. Funnily enough, you would have to download the form or phone up for it in any case.

Many will opt for the internet, as long as the website doesn't freeze up, rather than risk being held on the phone for ages.

Which bonds should I buy?

You can put between £500 and £10,000 in a fixed rate 2.8% one year bond and between £500 and £10,000 in a 4% three year bond.

Obviously most people will have less than £20,000 to salt away and a large proportion will be investing less than £10,000.

If you are one of those and wondering which bond to choose, it is worth noting that the three year bond appears to pay a better rate of interest even if you cash it in after a year and pay the penalty of 90 days interest.

But both of them pay more than equivalent bonds from banks and building societies.

What do I need to have with me when I apply?

If you are applying over the internet or by phone, you will need to have your debit card handy. It has to have your name on it.

You will be asked to give your bank details and to enter your address.

They might send you a form by post for you to sign and confirm the application.

Applying by post, you would have to get hold of the form, fill it in and send it back with a cheque.

When will they take the money?

If you apply online or over the phone, the investment is deemed to have started on the same day, even if they ask you subsequently to complete a confirmation form by post.

You will receive confirmation by email or, if you choose, in a letter.

If you apply by post, the investment would start on the day the application is received, assuming in both cases that the bonds haven't been over-subscribed by that time.

When will I get my interest?

The interest is paid on maturity, in other words at the end of the investment term, or when you cash in the bond.

So it's a good way of salting money away for a decent rate of interest, but not much use if you are looking for an account which pays you interest every month.

Broken, panic-ridden eurozone

Events in the eurozone in the last few days look mysterious, at first, and on reflection, even more worrying.

This matters because our savings, our pensions and our mortgages could be affected.

What's the mystery? When you think about it, the outcome of the Greek election was the most stability-inducing one that the financial markets could have hoped for.

But they got the jitters immediately afterwards. The returns (or yield) on Spanish 10 year bonds, or IOUs, rose well above 7%.

What that means is that big investors were demanding a higher interest rate to compensate for the growing risk of lending their cash to Spain - even though the Greek result was probably what bond investors would regard as good news.

And the rate has been getting close to unsustainable levels, levels at which the country can't carry on borrowing for long.

Not much had changed in Spain over the previous few days. Yet the Greek outcome seemed to make things worse. Why?

Was it simply because eyes were temporarily averted by the distraction of an election elsewhere?

Or was it because dastardly speculators, profiting from pushing down the value of investments in wobbly countries, were shifting their sights from Greece to Spain?

It seems as though the real answer could be that there is a feeling of chaos, dislocation and deep pessimism amongst the investors and dealers who inhabit what we know as "the markets".

One expert in eurozone bonds just told me:

"This is a completely broken, dysfunctional market, experiencing bouts of panic. And there's a complete lack of confidence in the ability of eurozone leaders to shore it up."

For these operators Greece was a sideshow. In fact, Spain is also a sideshow. Italy is the horror that blocks their vision so much that, in financial terms, they can't see the other side of it.

The reason is that it would cost so much to rescue Spain, it's not clear how an Italian rescue could be paid for. So when they turned their binoculars to Spain after Greece, their hands start shaking again.

Think about it. There are four big countries in the eurozone: Germany, France, Italy and Spain. Can you have two of them on life support?

Hence, the worries about the survival of the euro persist. And, as we keep being told, damage to the euro has a knock-on effect on the UK.

It's what George Osborne and the Bank of England were scared of last week when they announced they would flood our banks with extra lending power.

Then many thought they were acting just in case Greece imploded. Now we know that emergency measures were probably going to be needed, whatever result came out of Athens.