NS&I makes changes to its product range
NS&I today announced that its Savings Certificates (both Fixed Interest Savings Certificates and Index–linked Savings Certificates, also known as Inflation-Beating Savings) have been withdrawn from general sale and that it is reducing the interest rates paid on its Direct Saver and Income Bonds by 0.25% with immediate effect. Sales volumes in recent months across all three products have far exceeded those either anticipated or required by NS&I.
Jane Platt, Chief Executive, NS&I, said:
“NS&I has a unique position at the heart of the UK savings sector and we continue to follow a policy of acting transparently and balancing the interests of our savers, the taxpayer and the stability of the wider financial services market. While doing this we are tasked with meeting the government financing objective – called our Net Financing target – which is set for us each year by HM Treasury. This year we have agreed to broadly balance the funds coming into NS&I with the funds leaving us – in other words our Net Financing target is zero within a range of £2.0 billion either side of this.
“We’ve seen significant amounts of money invested into these products over recent months and so we’ve taken the difficult decision to withdraw Savings Certificates from general sale and reduce the interest rates paid on our Direct Saver and Income Bonds. This is designed to ensure that we do not exceed the upper end of our Net Financing target range.
“The volume of sales over the past few months is such that our forecasts show we were at risk of exceeding the top end of the range, so we needed to take action to reduce sales.”
NS&I’s website and call centres stopped taking new sales of Savings Certificates from 00.00am this morning, and Post Office counter sales have also been suspended with immediate effect. Postal applications received today will be honoured, but all postal applications received after midnight tonight will be returned to the customer. The new rates on Direct Saver and Income Bonds came into effect from 00.00am this morning.
On maturity, existing Savings Certificate customers can continue to rollover their investment into the same term they currently hold. They can also reinvest into any of the Savings Certificate terms and Issues – either the 3 or 5 year Issue of Index-linked Savings Certificates or the 2 or 5 year Issue of Fixed Interest Savings Certificates – regardless of which Savings Certificate they currently hold.
However, as Savings Certificates have been withdrawn from general sale, customers who have invested in other NS&I products will not be able to reinvest their money into Savings Certificates.
Notes to Editors
| New variable rates (gross rates1) (effective from 19 July 2010) | New rate p.a. (change in brackets) | AER2 |
|---|---|---|
| Income Bonds £25,000+ Under £25,000 |
1.75% (-0.25%) 1.45% (-0.25%) |
1.76% 1.46% |
| Direct Saver | 1.75% (-0.25%) | 1.75% |
- Gross means the taxable rate of interest without the deduction of UK Income 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-forlike 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.