Paul Lewis: June money news
New savings bonds, compensation limits to rise, better treatment for bereaved customers, and why over-80s are being short-changed.
Image credit: GettyImages/Zhanna Danilova
New savings bonds, compensation limits to rise, better treatment for bereaved customers, and why over-80s are being short-changed.
A set of new fixed-term bonds offering reasonably attractive rates of interest have been launched by National Savings & Investments (NS&I).
You can save over one, two, three or five years and earn 4% or a smidge more with what it calls Guaranteed Growth Bonds.
The interest is taxable at the end of the bond’s term, and you cannot withdraw the money before then. You can invest between £500 and £1 million in each.
You can find slightly better rates from banks, but for big savers, NS&I has the advantage that balances are guaranteed up to the maximum allowed in the account – currently £1 million in each for each individual bondholder. Dream on!
The Bank of England plans to raise the compensation limit for savings in a bank, building society, or credit union.
Currently the first £85,000 is protected by the Financial Services Compensation Scheme (FSCS) if the firm goes bust or fails. That limit was fixed in 2017 and the Bank wants to raise it to £110,000, probably later this year.
The FSCS has paid out more than £10 million in the past three years to compensate savers, largely due to credit unions failing.
The money is normally refunded in less than a fortnight, but the rules are a bit complicated so check them at fscs.org.uk.
Read more about FSCS protection and the plans for a rise in the compensation limit.
Banks, insurers and other financial firms have been warned that they must treat bereaved customers more sympathetically.
While the regulator, the Financial Conduct Authority (FCA), says its research found some very good practice, it also found the opposite.
It has issued guidance to ensure all firms it regulates who deal with bereaved people follow their consumer duty. That means they should treat customers as they’d like to be treated themselves.
If you find your bank or insurer treating you badly, complain and remind it of its consumer duty. You can read the report at fca.org.uk.
Here is a bit of annoying arithmetic for those people over the age of 80.
In 1971 the state pension of £6 a week (yes, it really was that little) was topped up with a 25p age addition for anyone aged 80 or more.
That was to recognise "the special claims of very elderly people". Since then, the old state pension – which two out of three pensioners get – has risen to £176.45, but the age addition remains frozen at 25p. Today, that amount won’t even buy a newspaper!
Had that bonus risen along with the rest of the state pension, it would now be £7.35 – and would be much more worth having!
Read more from Saga Money about how much state pension you could be getting.
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With the start of the new financial year on 6 April, our money expert explains the changes to your pension, benefits and taxes.
