PEER-TO-PEER and direct lending specialist Basset & Gold has launched two “pensioner bonds”, giving senior Brits access to higher yields while guaranteeing them a fixed monthly return rate.
The firm, which provides exposure to P2P platforms’ loans, property deals, balance sheet lending and other forms of finance, is offering the new products to individuals over the age of 55. The monthly income pensioner bond offers annual returns of 4.24 per cent, paid out in equal monthly payments, while the compounding pensioner bond offers returns of 4.32 per cent, to be paid out once a year.
The two products will include a terminal illness clause that will grant investors easy access to their money in unexpected circumstances.
The bonds will help pensioners shield and boost their income amid uncertainty regarding the future of the government’s ‘triple-lock’ guarantee, the firm said.
“We feel strongly that pensioners and those nearing retirement should not have to suffer stress and insecurity about their future income,” said Basset & Gold’s head of relationship management Daniel Smith.
“We believe that receiving a good pension income should not be a luxury and we hope that these products will put such an income within the reach of more people.”
Prime Minister Theresa May is considering replacing the ‘triple-lock’, whereby pensions go up each year by whichever is highest out of inflation, average earnings growth or 2.5 per cent. The change in policy would not be popular with older voters but it may help to address the UK government’s soaring welfare bill.
“The total government spending on pensioners was £67bn in 2014-2015 and is projected to fall to £62bn by 2020,” said Basset & Gold.
Conversely, the firm pointed out that marketplace lending is currently expanding at an annual 51 per cent growth rate and is globally expected to reach $290bn (£224bn) by 2020.
The firm launched its own Innovative Finance ISA in March that also guarantees fixed monthly returns, in contrast to the variable rates generally offered by P2P platforms.
“Basset & Gold makes its profits from any excess returns it can achieve over and above the fixed rate it generates for customers,” it said.
“This incentivises the company in a way that is more aligned with a customer’s goals than a fee-based model, which reflects its dedication to disrupting the financial services market to create greater transparency and fairness.”