National Savings & Investments Index Linked Savings

NS&I has reintroduced for general sale a new Issue of its Savings Certificates, including Index-linked Savings Certificates (also known as Inflation-Beating Savings) and Fixed Interest Savings Certificates.The new Issues are available to savers in a 5-year term only and are tax-free. Index-linked Savings Certificates will pay index-linking, measured by the Retail Prices Index, plus a fixed rate of interest of 0.50% AER. Fixed Interest Savings Certificates will pay 2.25% AER.The March 2011 budget confirmed NS&I’s Net Financing target for 2011-12 as £2 billion (within a range of +/- £2 billion). To meet this target NS&I will need to achieve inflows of some £14 billion. This has given NS&I the ability to reintroduce Savings Certificates following their withdrawal from general sale in July 2010 due to exceptional demand which risked NS&I exceeding its Net Financing range for 2010-11.Savers will have the opportunity to invest in both the 5-year Index-linked Savings Certificate and the 5-year Fixed Interest Savings Certificate. The upper limit for investments in Savings Certificates remains at £15,000 per Issue.

Index-linked Savings Certificates - a reminder of how they work

On each anniversary they calculate the index-linking by using the Retail Prices Index (RPI) figures that apply to the Certificate at the start and end of each year of investment (not the monthly changes in between). Therefore, the current inflation rate should not be used as a guide to what the investment will earn in the future. The Certificates are designed to be held for the whole investment term to receive the full guaranteed compound interest added on top of index-linking, as the guaranteed rates of extra interest increase each year during the term, equating to 0.50% AER.

NS&I Inflation-Beating Savings key features
Savings grow ahead of inflation, as measured by the Retail Prices Index
Minimum investment of £100, maximum investment £15,000 per Issue
All returns are tax-free
Interest and any index-linking added at the end of each year
Designed to be held for a 5-year term, no interest or index-linking paid if cashed in during the first year
Capital invested is 100% secure

The early withdrawal terms of these savings certificates is good as although no interest or index linking is paid if they are cashed in year one after that they pay the most recent anniversary value plus index linking and interest.