More than £1bn pensioner bonds were sold in the first two days of the scheme, announced by then chancellor George Osborne in December 2014 and launched in January the following year.

The bonds, which were available to those over 65 with a four per cent return over three years, started to mature on 15 January 2018.

NS&I, the government-backed savings group, is writing to bondholders with a variety of options. However, If they do nothing, the bonds will be reinvested at a lower rate.

Pensioners were allowed to invest £10,000 each in the bonds, with those who put away the full amount in January 2015 having £11,300 to reinvest

If customers with maturing bonds do nothing, their cash will be automatically reinvested into the NS&I Guaranteed Growth Bond, which pays 2.2 per cent, a 43 per cent drop on the previous generous rate.

The money will, once again be tied up for three years, or savers can access it early but will lose 90 days interest. Those who choose not to go for the Growth Bond option will need to return their instructions by post or online to NS&I.

Raj Shah, from Blue Wealth, said that customers with the bonds should consider whether they are using the cash as a buffer, or whether they are hoping for it to beat inflation when deciding whether to keep the bonds.

"With inflation at three percent this money is guaranteed to lose buying power," he said. "On the other hand it is guaranteed so I can see pros and cons."

As with many short to medium-term investment and mortgage options, it is important to build in a regular review of your portfolio which we offer clients, as part of our service, every year. 

Please contact us if you have any queries regarding bonds you hold or would like to organise a review of your plans.   We can be reached by calling 0141 572 1340 or by email to make an appointment.

Copy courtesty of FTAdviser.com