NS&I over-65s bonds are the biggest opening financial sale in history, says Osborne

The state-backed investments have proved very popular with older savers

The opening sale of the Government’s new over-65s bonds is “the biggest” of “any retail financial product in Britain’s modern history”, George Osborne has said.

The Chancellor hailed the £10bn National Savings and Investment (NS&I) bond sale as “hugely successful”.

The bonds, which can only be bought by people over the age of 65, pay their holders annual interest rate of 4% on the amount paid for them.

The pay-outs from the bonds are designed to provide a stable retirement income.

The bonds amount to the Government borrowing money from savers at an interest rate far higher than it could otherwise do so on the open market, meaning they effectively offer a subsidised pay-out to over-65s who buy them.

As of Saturday morning £1.15bn of the bonds had been sold, already committing state-owned NS&I to tens of millions of pounds of interest payments a year.

Mr Osborne tweeted: “Latest figures this morning show that we've had biggest opening sales of a retail bond sale in modern British history.

“Our long-term economic plan involves supporting savers. Can report that our 65+ Pensioner Bond proving hugely successful.

“Can confirm £1,153 million of bonds sold in 2 days to over 110k pensioners. Total of £10bn available - so plenty left & on sale for months.”

Huge initial demand for the bonds crippled the website set up by National Savings and Investments earlier this week.

National Savings and Investments is a UK state-owned savings bank, previously known as the Post Office Savings Bank when it was created in the 19th century.

The bonds are generous, providing a far better pay-out than most fixed-rate investments. A three-year bond with an interest rate of 4% and a one-year bond with a rate of 2.8% are both available.

They are limited to those aged 65 or over and no more than £20,000 per person can be invested in the two classes of bonds taken as a pair.