The chancellor confirmed on Wednesday the launch of the new NS&I bond available at a rate of 2.2 per cent. However, critics were quick to point out that the rate looked unappealing and hardly beat the rate of expected inflation for the next three years.
The new three-year bond will launch in April 2017 and will pay 2.2 per cent interest on deposits of up to £3,000, with contributions starting from £100, available for 12 months from April 2017.
But critics were quick to argue that the rate was not far above that offered by savings bonds on the high street or the rate of inflation, which is forecast to be 2.4 per cent this year, 2.3 per cent next year and 2 per cent in 2019.
Head of pensions at Aegon UK, Kate Smith, said: "The new bond will allow anyone from age 16 upwards to save a meagre £3,000 into the new government product, at an interest rate of 2.2 per cent fixed for three years. At this level, these savings are highly unlikely to keep up with inflation giving predictions of cost of living increases of 3 per cent or more in the coming years.
"It's unlikely that this product will prove as popular as the 'pensioner bond' launched for over 65s in 2015, which paid higher interest on considerably larger investments."
