New issues of NS&I Savings Certificates
NS&I today introduced for general sale new Issues 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.
Jane Platt, Chief Executive, NS&I, said: “Our aim is to keep Savings Certificates on sale for a sustained period of time and to enable as many savers as possible who wish to invest to do so. With this in mind we will be offering a 5-year term, only available direct from NS&I. We understand fully that we will see very high demand for Index-linked Savings Certificates. For those who want to invest the easiest and quickest way is to visit nsandi.com.”
Savers can invest in Savings Certificates on www.nsandi.com, via NS&I’s UK-based contact centres or by post. They will not be available through the Post Office.
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 we 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-free1
- 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
Investment term and interest rate
| Tax-free1 fixed rates | Rate p.a. / AER2 | Equivalent grossed-up rate for basic rate taxpayers | Equivalent grossed-up rate for high rate taxpayers | Equivalent grossed-up rate for additional rate taxpayers |
|---|---|---|---|---|
| 5-year Indexlinked Savings Certificates (48th issue) Guaranteed compound rate over 5 years | Indexlinking + 0.50% | Index-linking + 0.63% | Index-linking + 0.83% | Index-linking + 1.00% |
NS&I Fixed Interest Savings Certificates
Key features:
- A lump sum investment that earns a guaranteed rate of interest
- Minimum investment of £100, maximum investment £15,000 per issue
- All returns are tax-free1
- Designed to be held for a 5-year term, no interest paid if cashed in during the first year
- Capital invested is 100% secure
Investment term and interest rate
| Tax-free1 fixed rates | Rate p.a. / AER2 | Equivalent grossed-up rate for basic rate taxpayers | Equivalent grossed-up rate for high rate taxpayers | Equivalent grossed-up rate for additional rate taxpayers |
|---|---|---|---|---|
| 5-year Fixed Interest Savings Certificates (97th issue) Guaranteed compound rate over 5 years | 2.25% | 2.81% | 3.75% | 4.50% |
Notes to Editors
- Tax-free means that interest and any index-linked returns are exempt from UK Income Tax and Capital Gains Tax.
- AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year the rate quoted and the AER will be the same.
- Index-linking is calculated using the Retail Prices Index (RPI). The RPI measures the average change from month to month in the prices of goods and services purchased by most households in the United Kingdom (Office for National Statistics). NS&I continues to use the RPI as the measure of inflation, and not the Consumer Prices Index (CPI), which the Government now uses for its inflation target. Both the RPI and CPI can go up or down, and the differences between them can change.
- NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to over 26 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.