It has been estimated that approximately £800 million has been withdrawn from bank and building society savings accounts with much of it being used to buy the new Government Pensioner Bonds in March.
The vast amount of money moved shows that thousands of pensioners have taken advantage of the deal offered to them by the Government run National Savings and Investments (NS&I).
The British Bankers Association (BBA) calculated that much of this money has been withdrawn to buy the lucrative pensioner bonds.
The Bonds are available in two formats which offer high street busting interest rates. The first is a one year bond that offers a 2.8% interest rate payable at the end of the term, the second is a three year bond which offers 4% interest at the end of the term.
A saver is allowed to invest up to £10,000 in each type of bond, allowing them to invest a total of £20,000 each. In addition, if a couple both buy bonds and one dies before the bonds mature, the bonds can be transferred into their partner’s name even if they also have some bonds which would take them over the £20,000 limit.
The bonds proved so popular that the Chancellor announced an extension so that more savers would be able to invest. The bonds will still be available to buy up until the 15th of May.
January and March have been the only two months since May 2011 that more cash was withdrawn from savings and current accounts than was deposited.
Industry experts hope the enthusiasm for the products will help to increase competitiveness when it comes to interest rates for savers, with banks wanting to claw back customers with more attractive savings accounts.
Pensioners have suffered from six years of ultra-low interest rates, along with high cost of living and inflation. The bonds are seen as a repayment from the Government for their suffering in the savings market since the start of the economic crisis.