A pensioner bond scheme has been extended by the UK government until just after the general election, George Osborne has said.
The extension of the scheme, which carries an opportunity cost of hundreds of millions of pounds, will carry on until mid-May after more than 600,000 over-65s bought into the savings opportunity since they were first offered last month.
The rush to take advantage left some consumers struggling to get on the website as well as finding phone lines jammed.
A pot of up to £10bn has been put aside for the 65-plus bonds and the opportunity cost to the taxpayer of the state borrowing from pensioners rather than the capital markets runs into “hundreds of millions of pounds”.
The chancellor told BBC1’s The Andrew Marr Show on Sunday that it was important to the economic recovery to encourage savers.
“Our 65-plus pensioner bond has been the most successful savings product this country has ever seen. Over 600,000 pensioners have benefited from it.
“What I can confirm today is that we are going to guarantee that it remains on sale for another three months,” he said.
Free market thinktank the Institute for Economic Affairs criticised the extension of the scheme, arguing that it was distorting the market and was effectively a direct subsidy to wealthy pensioners from the working-age population.
“This announcement well and truly proves that we are not all in it together,” said the organisation’s director general, Mark Littlewood. “Pensioner bonds have never been anything other than a gimmick that will benefit pensioners at the expense of the taxpayer, and it beggars belief that the government is prolonging such a foolish policy.”
