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Media centre /
Press releaseNATIONAL SAVINGS AND INVESTMENTS RATE CHANGES30 December 2005New issues of Inflation-beating savings now available National Savings and Investments (NS&I) is increasing interest rates on its fixed rate products following an upward movement in market rates for Government Bonds (gilts). The last interest rate changes to NS&I fixed rate products were announced in July 2005, with the exception of the inflation-beating three-year Index-linked Saving Certificates which were last changed in November 2004. This means savers waiting to invest in a new issue of three-year Index-linked Saving Certificates can now do so for the first time in over a year. Savers can invest up to £15,000 in the new three-year issue as well as up to £15,000 in the new five-year issue of Index-linked Saving Certificates. Fixed Rate Products New issues of NS&I’s range Inflation-Beating Savings, Fixed Rate Savings Certificates, Fixed Rate Savings Bonds, Children’s Bonus Bonds, Pensioners Guaranteed Income Bonds and Capital Bonds will offer interest rates up to 0.30% higher and will be available from 30 December 2005. Good news for savers The new issue of three-year Index-linked Saving Certificates is the first one to be released in over a year as three-year gilt rates have remained static during this period. This is the longest gap between issues for this product there has ever been. Our range of Inflation-Beating Saving Certificates are the only savings products on the market that offer a safe, tax-free*, no-risk home that guarantee an inflation-beating return. The new issue will offer an interest rate 0.10% higher, at 1.05% plus RPI** (currently 2.4%) tax-free*. This is equivalent to a rate of 5.75% for higher rate taxpayers or 4.31% for basic taxpayers. Savers can also invest in a new issue of the five-year Index-linked Saving Certificates, which will also go on sale on 30 December. How do Inflation-Beating Savings work? The Inflation-Beating Savings range consists of three and five-year Index-linked Savings Certificates. The money invested earns a return directly linked to the headline rate of inflation, otherwise known as the Retail Prices Index (RPI) – currently at 2.4% – plus guaranteed rates of interest on top. This means the returns outstrip inflation and, as nothing is taken away in tax, the spending power of the investment is increased by the end of the term. Anyone aged seven or over can invest from £100 up to £15,000 per Issue (a new issue becomes available each time NS&I changes the interest rate on Saving Certificates), and they may be bought for children under seven. NS&I’s interest rates: key facts
John Prout, NS&I’s sales director, said, “We always aim to provide consistent and fair rates and, as gilt yields have increased recently, we are now in a position to increase the interest rates offered on all our fixed rate products. Whenever there are improvements in the market, we always aim to pass these benefits on to our customers. “This is good news for savers, particularly for our Index-linked Saving Certificate customers, who have been patiently waiting for a new issue of the three-year term. Savers can put up to £15,000 into each of the new issues to protect their money from the effects of inflation and the taxman.” ENDS NOTES TO EDITORS
1. * Tax-free means the return is exempt from UK Income Tax and Capital Gains Tax at all rates of taxation. 2. ** RPI (Retail Prices Index) is the measure of inflation NS&I uses to calculate measures in the value of its Index-linked Savings Certificates. The RPI is complied and published monthly by the Office of National Statistics. 3. 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.
4. At current tax rates.
5. These figures assume the Retail Price Index rises by its current figure of 2.4% for each of the next five years and that current rates of tax remain unchanged. 6. Rollover rate for withdrawn term(s) 7. Gross means the taxable rate of interest without the deduction of UK Income Tax. For further information, or to arrange an interview, contact the NS&I Media Team.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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