NS&I Green Savings Bonds, announced by Rishi Sunak in the 2021 Spring Budget, are now available for sale. The Bonds can be purchased and managed online at nsandi.com and it’s offering a 0.65 percent gross/AER fixed-rate over a three-year term.
Rachel Springall, Finance Expert at Moneyfacts.co.uk has commented on the launch of the Bonds and compared it to a product NS&I issued in the past, but no longer offers – Pensioner Bonds.
She said: “It’s encouraging to see an initiative to support green projects, but at 0.65 percent fixed for three years, savers could get a much higher rate elsewhere.
“Indeed, there are alternative brands offering green products, such as Gatehouse Bank which pays 1.78 percent gross as an expected profit rate on its three-year fixed Green Saver where a tree is planted on the savers’ behalf.
“Some savers may not be too keen to lock their money away for two or three years, but there are fixed bonds for 12 to 18 months that pay over 1 percent. Savers could also seek out mutuals which support local causes, and some even pay a reasonable return on their easy access accounts at the moment.
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The Government launched them in January 2015 to help people aged 65 or over get more interest on their savings.
Older savers could choose from a one-year fixed-rate deal paying 2.8 percent or a three-year fixed-rate deal paying a massive 4 percent.
The market-leading deals at the time were open to anyone over the age of 65 and allowed them to invest from £500 up to £10,000.
Even with interest rates at all-time lows, many savers may end up disappointed with the Green Savings Bonds offer.
Money saving expert Martin Lewis labelled the 0.65 percent interest rate “paltry” and “pants” compared to other deals on the market.
He said: “It only just matches the top easy-access savings account, yet with the Green Bonds you have no access to your money and it’s locked away for three years.
“The right comparison is with the top three-year fixed savings account and that pays nearly three times what the Green Bonds are paying. And while NS&I is as safe as it gets, with all UK regulated savings institutions you are protected up to £85,000 per person, so that has no practical advantage for most.
“This is quite simply not an account that those whose focus is on maximising interest will look at – it’s likely only something those willing to sacrifice substantial interest in order to support what they hope will be green causes are likely to consider.”
Despite its seemingly low interest rate, the Green Savings Bond launch has been welcomed by a number of environmentally focused organisations.
Sean Kidney, CEO of Climate Bonds Initiative, commented: “Every government has to green their budgets to meet climate targets.
“The UK’s landmark green savings bonds show just how that greening can and will be funded. It serves as an example to the world.”
Rhian-Mari Thomas, the CEO of the Green Finance Institute, also said: “Following the success of the UK’s first two Green Gilt issuances, it’s great to see the launch of the new Green Savings Bonds, which will allow savers to put their money to work for the benefit of the environment.
“This is another important step to channel investment towards building a green, prosperous and inclusive UK economy, and an opportunity for savers to get involved.”