Here’s why chancellor George Osborne’s pensioner bond bonanza won’t translate into votes
George Osborne's so-called "granny bond" scheme has been heavily criticised as a blatant bid for the older vote, however new research has shown the chancellor's expensive giveaway is unlikely to pay off for the Tories.
Rate setters at the Bank of England have held the main interest rate at a record low 0.5 per cent for six years, and as this affects the rates offered by individual banks, cash savers have seen returns turn to chicken feed.
Nonetheless, trying to boost the sparse savings landscape won't be enough to win the general election, because nine in 10 over-65s say poor returns won't affect who they're going to vote for in the upcoming election.
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: "Pensioner bonds are a small glimmer of light in an otherwise bleak six years for cash savers."
"[But] our survey suggests they won't be an effective vote-winner though; nine in 10 savers won't be influenced by low cash rates when they arrive at the ballot box in May."
However, 80 per cent of over 65s think that the pensioner bonds are a good idea, with those who don't saying their interest rates were still too low, that they should be exempt from tax like an ISA, and interest payments need to be more regular.
The 65+ guaranteed growth bonds, which were launched in January, offer marketing leading rates, at 2.8 per cent interest for the one-year bond or four per cent over three years. Savers can invest up to £10,000 in each bond, amounting to £20,000 per individual.
More than £1bn of the bonds were sold in the first two days of its availability in January, with the huge demand causing the National Savings and Investments (NS&I) website to crash.
And the scheme was later extended until 15 May – or one week after the general election – due to its popularity. At the time, Osborne hailed it as "the most successful saving product this country has ever seen."
But it was derided by some commentators as a thinly-veiled bid to secure votes from those aged 65 and over. Pensioners are much more likely to vote than younger segments of society, and thanks to an ageing population, there's also more of them.
Financial services company Hargreaves Lansdown surveyed over 1,000 savers who have transferred from a cash ISA to a stocks and shares ISA, to find out what they think about cash rates, as well as the forthcoming general election.