NS&I announces latest stages of its modernisation programme

The key changes are:

• On 25 May 2013, NS&I will be transferring customers holding its T Cash ISA (formerly TESSA-only ISA) and Cash ISA, which both currently pay 0.5% and have been closed to new customers since 1999 and 2009 respectively, into its Direct ISA which currently pays 2.25%.
• A new more accessible minimum investment amount for Direct ISA, lowered from £100 to £1.
• Cash investments into Premium Bonds over the Post Office counter will end from 1 April 2013. Savers can still invest in Premium Bonds by cheque and debit card at the Post Office or directly from NS&I by post, phone, online or standing order.

NS&I closed its Cash ISA to new customers in April 2009 and withdrew the ability to make deposits into this product at the Post Office, although collecting withdrawals at the Post Office was still possible. Existing customers were still able to manage the account directly with NS&I by post, phone and electronic transfer. From 00.01 on 25 May 2013, the Cash ISA will close completely and customers holding it will automatically be transferred into NS&I’s Direct ISA which pays a much higher rate of interest – currently 2.25% against 0.5% for Cash ISA. NS&I’s Direct ISA can be managed by phone and online. In addition, NS&I will be lowering the minimum investment amount for its Direct ISA from £100 to £1 from 6 April 2013. NS&I will be contacting affected customers to explain the changes in advance of the transfer taking place.

For a number of years NS&I has grown the number of customers transacting with it directly by post, phone and online – delivering a saving for the taxpayer. As NS&I has become a more direct business it has withdrawn products from the Post Office and now only Premium Bonds remain on sale at Post Office counters. Premium Bonds have therefore become an exception as the only NS&I product where cash investments are still possible and NS&I has decided to withdraw cash payments from 1 April 2013.

Jane Platt, Chief Executive, NS&I, said:

“Since 2007 we have been working to simplify and modernise our range of savings products and to encourage our customers to invest with us directly.

“From 25 May 2013, customers holding our Cash ISA will benefit from the much higher interest rate paid on our Direct ISA. There will be some changes for our customers who use the Post Office – however, staff in our UK based contact centres will be on hand to help with the transition.”

As well as simplifying and modernising NS&I’s range of savings, these changes will help NS&I reduce its cost to the taxpayer and deliver a 10% reduction in its budget in real terms by 2015 – a requirement set down in the 2010 Spending Review.