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Media centre /
Press releaseNATIONAL SAVINGS AND INVESTMENTS RATE CHANGES: INCREASES26 October 2006New issues of Index-linked Savings Certificates now availableNational Savings and Investments (NS&I) is increasing interest rates on most of its inflation-beating Index-linked Savings Certificates, Fixed Interest Savings Certificates, Fixed Rate Savings Bonds and Pensioners Guaranteed Income Bonds. This follows movements in fixed term products, which include market rates for government bonds (gilts). However, while returns on short-term gilts (up to two years) have risen, there have been no significant increases on longer terms gilts (five years). This is why NS&I has only adjusted rates for its shorter duration, fixed term products. Interest rate increases
There will be no changes to the 5-year rates for any of the above products. See table below for full details. Investing tax-free1The introduction of these new rates means new issues of the two and three-year Savings Certificates terms, allowing savers to invest a further £30,000 in total, earning tax-free interest on Fixed Interest Savings Certificates and tax-free inflation-beating returns on Index-linked Savings Certificates. NS&I’s range of Inflation-beating Savings Certificates are the only savings products on the market that offer a safe, tax-free, no-risk home and guarantee an inflation-beating return, when held for the full term or a minimum of 12 months. 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 3.6% – 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 Savings 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, “These rate changes mean people can invest a further £15,000 each in two-year Fixed Interest Savings Certificates and in three-year Inflation-beating Savings, giving additional opportunity for people to shelter more of their savings from the taxman. “Our aim is to provide consistent and fair interest rates and we’ve seen some significant fluctuations in gilt movements over recent weeks. But we’ve held our nerve and managed to avoid cutting rates when gilts have dipped. In fact, this is the first change to our fixed rates since April.”
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 3.6% for each of the next five years and that current rates of tax remain unchanged 6.Gross means the taxable rate of interest without the deduction of UK Income Tax.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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