NS&I announces changes to its fixed-term investments
NS&I today announced the latest stage in its programme to simplify and modernise its savings range.
The changes – which start to come into effect from 20 September 2012 – affect NS&I’s Index-linked and Fixed Interest Savings Certificates, Guaranteed Growth/Income Bonds and Children’s Bonus Bonds. As previously announced, Children’s Bonus Bonds will no longer be available from the Post Office.
This change will take place from 20 September 2012.
From this date, Children’s Bonus Bonds will be renamed, simply, Children’s Bonds, and will only be available directly from NS&I, by post, telephone and online. Secondly, there are changes to the way NS&I’s fixed term investments work, and how they can be managed. From 20 September 2012, NS&I’s fixed term investments range will join Premium Bonds and NS&I’s Direct ISA and Direct Saver on a new banking system, which will enable customers to view and manage those investments bought or renewed on or after 20 September online.
Simultaneously, NS&I is making changes to its fixed term investments range to make it more consistent and easier to understand, and to provide savers with more frequent information on their investment. The main changes can be viewed in the table below.
NS&I’s range of fixed term investments has evolved over many years (for instance, Savings Certificates date back to 1916) – and consequently their features vary widely. The changes significantly simplify these, for example they include a common minimum age for investments of 16 across all of NS&I’s products, and a change to the penalty arrangements for the early encashment of Children’s Bonds and Savings Certificates.
In the future – if customers cash in before the end of the agreed term – a penalty equivalent to 90 days’ interest on the amount cashed in will be deducted, in line with that incurred for NS&I’s Guaranteed Bonds. Index-linked Savings Certificates savers cashing in early will also forgo the index-linking on the whole of their Certificate for the year in which early repayment takes place, even if only part of the Certificate is cashed in.
Savers holding NS&I fixed term investments do not need to take any action as NS&I will write to them around 30 days prior to the maturity of their investment. They will continue to receive a ‘maturity pack’ from NS&I which informs them of the changes and their options, and their investment will be automatically renewed if they do not inform NS&I of their requirements prior to the maturity of their current Bond/Certificate. Customers will need to take action during this period should they not intend to keep their new Certificate or Bond. During the transition period NS&I will give customers who hold Savings Certificates or Children’s Bonds a further 30 days, after their investment is automatically renewed, to cash in their investment without penalty should they so wish.
John Prout, Retail Customer Director, NS&I, said:
"Since 2008 NS&I has been simplifying its product range. Today we have announced a number of changes to our fixed term investments which will apply to investments renewed from 20 September 2012.
“None of these changes impact customers until the end of an investment term. Even then we believe the changes will be of limited impact for most people, and they need to take absolutely no action before they receive a maturity letter. We are working very hard to ensure that we provide clear and timely information, and when customers receive their maturity letters it will be important for them to familiarise themselves with the details of the changes.
“As well as alterations to some terms and conditions – for example standardising a penalty arrangement for those who cash in a fixed term investment before the agreed maturity date – customers will be given the facility to take more control over their savings. They will receive a record of their investment and interest earned each year and every time they transact, and progressively a full record of their entire savings portfolio online.”
Key features for Bonds or savings certificates renewed after 20 September 2012
| Guaranteed Growth Bonds/Guaranteed Income Bonds | Index-linked Savings Certificates | Fixed Interest Savings Certificates | Children’s Bonds (‘Children’s Bonus Bonds’ prior to 20/09/12) | |
|---|---|---|---|---|
| Minimum age | No change (16+) | 16 +, can be purchased for minors in trust if on general sale (previously could buy on behalf of a child 7 or under. Over-7s would manage their own investment) | 16+, can be purchased for minors in trust if on general sale (previously could buy on behalf of a child 7 or under. Over-7s would manage their own investment) |
Over-16s (parents, guardians, grandparents) can invest/renew for under-16s. Management by one parent/ guardian (previously able to renew for those aged 16, managed by both parents) |
| Interest rate/bonus | No change (flat rate of interest applied) | Flat rate applied, plus RPI index-linking (previously escalating interest rate applied to encourage customers to hold investment for the whole term, plus RPI index-linking) | Flat rate applied (previously escalating interest rate applied to encourage customers to hold investment for the whole term) | Overall return consistent, flat rate of interest, no bonus payable (previously lower flat interest rate, bonus payable on 5th anniversary) |
| Penalty for early repayment | No change (equivalent to 90 days interest deducted from the amount being cashed in) | No indexlinking for year on the whole Certificate, plus equivalent to 90 days interest deducted from the amount being cashed in (previously no indexlinking/interest paid if cashed in during first year. Escalating interest rate applied) | Equivalent to 90 days interest deducted from the amount being cashed in (previously no interest if cashed in during first year. Escalating interest rate applied) | 90 days interest deducted from the amount being cashed in (previously the customer would receive the value at its most recent anniversary date, plus interest on that value to the date of repayment. No interest paid if cashed in during first year) |
| Notice given by NS&I prior to maturity of investment | No change (previously 30 days) | 30 days (previously 10 days).In addition, during the transition period customers whose investments are automatically renewed will be given up to 30 days in which they can cash in their investment without penalty. | ||
Changes to accessibility
| Guaranteed Growth Bonds/Guaranteed Income Bonds | Index-linked Savings Certificates | Fixed Interest Savings Certificates | Children’s Bonds (‘Children’s Bonus Bonds’ prior to 20/09/12) | |
|---|---|---|---|---|
| Managing investments | Savers can transact by post or authenticate to enable phone and enhanced online services eg view transaction history, obtain electronic statements (previously phone and post, online sales only) | Grandparents can buy by post. Parents can buy/manage by post/ online/ phone (previously also could buy via Post Office) | ||
| Authentication security process | Required for telephone/online transactions (previously only purchases were allowed by phone/online – and without authentication – other security processes used for postal transactions) | For telephone /online transactions by the responsible parent (previously purchases were allowed by Post Office/post with other security processes used) | ||
| Confirmation of investment | Investment record issued after a transaction. Statements issued annually. | Investment record issued after a transaction . Statements issued annually (previously a certificate of investment issued at purchase) | ||
Notes to Editors
- The changes to Children’s (Bonus) Bonds will affect both new customers and existing customers should they choose to renew their investment. As there are no Issues of Savings Certificates or Guaranteed Bonds currently on general sale, existing customers are affected only if, from 20 September 2012, they choose to renew their investments.
- View more information on NS&I’s website and a help video discussing the latest changes.
- NS&I announcement from November 2011.
- Current NS&I interest rates.
- 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.