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Media centre /
Press releaseNATIONAL SAVINGS AND INVESTMENTS RATE CHANGES03 April 2006
National Savings and Investments (NS&I) is changing interest rates on its Inflation-Beating Savings Certificates and Fixed Interest Savings Certificates following movements in market rates for government bonds (gilts). Rates are increasing on Fixed Interest Savings Certificates because returns on fixed rate (nominal) gilts have risen, while the returns on inflation-linked (real) gilts have fallen sharply, resulting in a reduction on Inflation-Beating Savings interest rates. NS&I last changed interest rates on its fixed rate products in December 2005. Investing tax-free1 The introduction of these new rates means new issues of all four Savings Certificates terms, allowing savers to invest a further £60,000 in total, earning tax-free interest on Fixed Interest Savings Certificates and tax-free inflation-beating returns on Inflation-Beating Savings. NS&I’s range of Inflation-Beating Saving Certificates are the only savings products on the market that offer a safe, tax-free, no-risk home and guarantee an inflation-beating return. 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 Retail Prices Index (RPI)2 – 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, despite many fluctuations in the gilt market over the past three months, this is our first rate change since December last year. “Whenever there are improvements in the market, we always aim to pass these benefits on to our customers. “This rate change enables customers to invest up to £15,000 in new issues of Savings Certificates, 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.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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