Last week more than 100,000 savvy silver-haired savers jumped at the chance to buy the government’s new ‘granny bonds’, netting the Treasury more than £1bn in just two days. It could have been more but the demand was so high that it crashed the website leaving savers unsure whether they had secured the bonds and in some case savers being charged 2 or 3 times for the same bond. Savers were offered 2.8% interest for a 1 year bond and 4% interest on a 3 year bond with an investment limit of £10,000.
So what does this tell us, that over 65’s are sitting with vast amounts of cash in zombie bank savings accounts and they are desperately searching for income to supplement their pensions. But it sounds like from the experts that these attractive saving products could be unavailable within weeks as pensioners take advantage of the favourable rates.
There is an alternative that offers better rates of return from Peer to Peer (P2P) Lending. P2P lending does not offer the level of security that the National Saving and Investments can offer (government backed), but if managed carefully pensioners can put their savings to work by investing in asset backed loans which are supported by commercial property. Pensioners could potentially earn 5.5% interest per annum by lending into Tranche A of our commercial property loans, the loan is secured by a 1st legal change over an income producing commercial property and they would receive income monthly. To put this into context the value of the property would have to fall by 50% before the pensioners capital invested would be at risk.
Proplend is actively working with The Pension Advisory Service (TPAS) to offer pensioners alternative options to put their savings to works in the search for much needed monthly income.