These look competitive compared with other savings accounts. The top two one year fixed rate savings accounts are First Save and the Post Office, which pay 1.85 per cent and 1.8 per cent respectively (source: MoneySavingExpert). The best three year accounts are Secure Trust Bank and Shawbrook Bank, which pay 2.51 per cent and 2.5per cent respectively.

The bonds will be available from January 2015 and will have an investment limit of £10,000 per bond per person.

The government expects that the 65 plus bonds will help an estimated 1 million pensioners. The bonds will be available directly from NS&I by post, phone or online.
George Osborne, Chancellor of the Exchequer, said: “A key part of our long term economic plan is to support savers and boost hardworking peoples’ financial security at all stages of life.

“That’s why the government is introducing savings bonds for people aged 65 and over, and why we’re confirming today that these bonds will pay the best available interest rates. They will give hundreds of thousands of older savers the certainty and comfort of a good return over the life of their investment.

“Investors can hold bonds jointly, but this will still count towards their individual limits – i.e. a couple could hold £40,000 jointly. There is a minimum investment of £500 per bond.”