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Terms and conditions

1 November 2007

Description

1. National Savings Certificates are a UK Government security issued under the National Loans Act 1968. The Certificates and these terms and conditions are subject to The Savings Certificates Regulations 1991 (Statutory Instrument Number: 1991/1031), as amended or re-enacted from time to time (see paragraph 45). In the event of any differences between these terms and conditions and the Regulations, the Regulations will prevail.

Definitions

2.  In these terms and conditions:
(a)  ’anniversary date' means an anniversary of the date of purchase of a Certificate (except any falling after the maturity date), but if the date of purchase was 29th February, the anniversary date will always be 28th February (even in leap years);
(b)  'base-date' means the date at which the UK General Index of Retail Prices is taken as being equal to 100;
(c)  'calendar month' means a named month beginning on its first day and ending on its last (eg 1st to 31st January);
(d)  'Certificate' means a National Savings Index-linked Certificate;
(e)  ‘Director’ means the Director of Savings;
(f)   ‘maturity date’ means the day after the last day of the term;
(g)   ‘NS&I’ means National Savings and Investments (formerly known as National Savings) operating through its Durham office or such other office as the Director may specify;
(h)  ‘post office’ means a branch of Post Office Ltd in the UK;
(i)   'Reinvestment Certificate' means an Index-linked Certificate where:
(i) the Certificate is purchased from the proceeds of cashed in National Savings Certificates or Ulster Savings Certificates of any Issue (including non Index-linked Issues) or Yearly Plan Certificates and is to be held in the same name as the person who held the cashed in Savings Certificates;
(ii) the encashment and purchase are made simultaneously by means of a completed reinvestment application sent to NS&I or, in the case of Ulster Savings Certificates, by means of a completed reinvestment application sent to the Ulster Savings Branch, Bangor; and
(iii) the Savings Certificates cashed in were not cashed in before their maturity date or, in the case of Yearly Plan Certificates, before the fourth anniversary of their certificate date;
(j) ‘term’, except in paragraph 44, means the period for which rates of interest were fixed at the time of purchase of the Certificate, regardless of whether the Certificate continues to earn interest after that term (see also paragraph 4).

3. For the purposes of these terms and conditions, a month is completed at the end of the day immediately preceding the same nominal day as the date of purchase (for example, for a Certificate purchased on 5th January, the first month is completed at the end of 4th February). Where the date of purchase was 29th, 30th or 31st of a month, and a later calendar month does not contain such a date, the relevant month is completed at the end of the day preceding the last day of that calendar month (for example, for a Certificate purchased on 31st March, the first month is completed at the end of 29th April). However, in the case of a Certificate with a purchase date of 29th February, every twelfth month will be completed at the end of 27th February, even where that month falls in a leap year.

Index-linking, interest and tax relief

4. A Certificate grows in value by index-linking and interest at rates fixed for a specified period of time, which will not be less than one year, (eg 18 months, two years, five years, etc) starting on the date of purchase. We call each period of time a ‘term’. In the case of terms expressed as a number of months, the term ends when the last month is completed (see paragraph 3). In the case of terms expressed as a year or a number of years, the last day of the term will be the day which immediately precedes the relevant anniversary date (for example, the last day of a one year term beginning on 5th January will be 4th January in the following year). Each term will have its own ‘Issues’ of Certificates issued in sequence and different interest rates apply to each Issue within each term. There may be more than one term available at any time. For details of how index-linking is applied to Certificates see paragraphs 15 - 17.

5. Each term available and the interest rates that apply to each Issue will be published in the London, Edinburgh and Belfast Gazettes. For details of the current Certificates on offer please see our Interest Rates leaflet available at post offices and from NS&I. Any Issue of Certificates can be withdrawn from sale without notice. An application can only be accepted for the Issue on sale on the date of purchase (see paragraph 26).

6. Index-linking and interest will be earned, from the date of purchase, as follows:
(a)  for Reinvestment Certificates, each complete month held;
(b)  for other Certificates, each complete month held, but no index-linking or interest will be earned in respect of such a Certificate which is cashed in before the first anniversary date.

7. The amount due when a Certificate is cashed in on the maturity date will be the maturity value (see Interest Rates leaflet).

8. The amount due when a Certificate is cashed in on an anniversary date (except where it is also the maturity date) or less than one complete month afterwards, will be the relevant anniversary value (see Interest Rates leaflet). Anniversary values will be rounded to the nearest penny.

9. The amount due when cashing in a Certificate which has been held for at least one complete month from an anniversary date will be the anniversary value on that anniversary date plus:
(a) index-linking for each complete month from that anniversary date to the date of repayment; and
(b) 1/12th of the annual interest for each complete month held from that anniversary date.
This paragraph does not apply to any month not completed before the maturity date.

10.  The amount due when cashing in a Reinvestment Certificate before the first
anniversary date but which has been held for at least one complete month from the date of purchase, will be the purchase price plus:
(a)  index-linking for each complete month from the date of purchase to the date of repayment; and
(b)  1/12th of the annual interest for each complete month held from the date of purchase.

11. In the event of a decrease in the Retail Prices Index:
(a)  any maturity value will never be less than the preceding anniversary value, or, in the case of a Certificate with a term of one year, the purchase price, together with interest at the relevant rate for the period from the preceding anniversary date to the maturity date;
(b)  any anniversary value will never be less than the preceding anniversary value or, in the case of the first anniversary, the purchase price, together with interest at the relevant rate for the year.

12. The amount due when a Certificate is cashed in after a maturity date will never be less than the maturity value.

13. The value of a Certificate will be rounded to the nearest penny when cashed in.

14. Sums payable in respect of index-linking and interest will be free of UK Income Tax and Capital Gains Tax.

15. An index-linked valuation under these terms and conditions will be related to the movement of the UK General Index of Retail Prices maintained by the Office for National Statistics, or any Index replacing that Index. This movement is indicated by the Index figure issued monthly and subsequently published in the London, Edinburgh and Belfast Gazettes. For the purposes of these terms and conditions, the Index figure applicable to any calendar month will be the Index figure issued in the immediately preceding calendar month.

16. An index-linked value will be calculated as V x B/A where:
(a)  'V' is the value of the Certificate at the beginning of the index-linked period (this will be the purchase price or the value at an anniversary date);
(b)  'A' is the Index figure applicable to the calendar month in which the first day of the index-linked period falls (this day will be the purchase date or an anniversary of it); and
(c)  ‘B’ is the index figure applicable to the calendar month in which the day after the final day of the index-linked period falls. This will be the maturity date, an anniversary date, or the day after the last completed month for which index-linking is earned.

17. If the Index is revised to a new base-date the Director will calculate notional Index figures designed to produce as closely as practicable the same effect as if the Index had not been so revised. These will apply to Certificates bought before the revision.

Who may buy and hold Certificates

18. Paragraphs 19 - 24 summarise the main features of the current Regulations (see paragraph 1).

19. Individuals. You may buy and hold Certificates:
(a) in your own name; or
(b) jointly with one or more other individuals.
Any other person may also buy Certificates on your behalf and in your name.

20 Children. Children under 7 years of age cannot buy Certificates. Certificates may be bought for a child under 7 years of age to be held in the name of the child. Certificates may similarly be bought for two or more such children to be held in their names jointly.

21. Trustees. You may buy and hold Certificates as a trustee either by yourself or jointly with one or more other trustees. Corporate trustees may also buy and hold Certificates. The Certificates can be held by the trustee(s) only or jointly with the beneficiary(ies).

22. Receivers. A receiver may buy Certificates on behalf of and in the name of a mentally disordered person.

23. Others. Registered friendly societies or any other body of persons approved by the Director may buy and hold Certificates. Any other person may also buy Certificates on behalf of and in the name of such a society or other body.

24. General. Certificates may not be bought by a person under a legal disability.

How to buy

25. You may buy Certificates by applying via the internet, by telephone or by post to NS&I; or in person at any post office which carries out NS&I business. Where you apply via the internet or by telephone and this is your first purchase of Certificates, you must confirm your application by signing and returning a confirmation form we will send to you by post. In accepting the terms and conditions you are confirming that you, and anyone else named on the application, are aware that your and their identity and address will be checked as detailed in the Index-linked Savings Certificates brochure. We may also write to you requesting documentary evidence of your identity and address. The form and/or letter requesting evidence of identity will specify the time within which the signed form and/or evidence must be returned to NS&I. If the form and/or evidence is not received at NS&I within the specified time the Director will not be able to process your application.

26. In all cases, an application to purchase is subject to acceptance by the Director: where you apply at a post office, acceptance can only occur when the application is subsequently processed by NS&I. If accepted the date of purchase will be:
(a)  for applications sent by post, the date your application and payment were received at NS&I;
(b)  for applications via the internet, the date your on-line application, including authority for a debit card payment, were received at NS&I.
(c)  for applications made by telephone, the first date by which NS&I took the details of your application, including authority for a debit card payment;
(d)  for applications at a post office, the date your application and payment were received at the post office.

27. Because Certificates of more than one term may be on sale at any one time, you must specify your choice of term when you apply to purchase.

28. We will send you a certificate of investment showing the amount and date of purchase.

Purchase and holding limits

29. The minimum for each purchase is £100 except for Reinvestment Certificates where there is no minimum. You may purchase any amount subject to the maximum holding limit in paragraph 30.

30. You may not purchase (or hold, if purchased on your behalf by someone else) a Certificate of any Issue if immediately after that purchase you would hold, either solely or jointly with any other person, more than £15,000 in Certificates (at purchase price) of that Issue. This does not apply to Reinvestment Certificates, where there is no maximum, nor do Reinvestment Certificates count in applying the limit to other holdings of the same Issue.
31. Where Certificates are held in the joint names of two or more persons the total value of the Certificates (at purchase price) will be counted against each of the joint holders when reckoning the value of Certificates held by them for this purpose.

32. Certificates held by a person as trustee however will not count towards his or her own maximum holding. Nor will Certificates held in the joint names of a trustee and beneficiary count towards the beneficiary’s own maximum holding. Although the maximum holding limit does apply to trust holdings, each trust fund is treated separately.

33. If a person inherits Certificates which cause his or her holding to exceed the maximum limit he or she may retain those in excess but may not buy further Certificates of that Issue if it would cause his or her holding (including inherited Certificates) to exceed, or further exceed, the holding limit.

34. The current Regulations (see paragraph 1) provide for how the limit applies in special cases.

Cashing in

35. Certificates bought by cheque or debit card can only be cashed in after your payment has cleared. The time taken for payments to clear is detailed in the Index-linked Savings Certificates brochure. Certificates can be cashed in by completing a form (available at post offices and from NS&I) and sending it to NS&I with your certificate of investment. To cash in a Certificate held jointly, both investors need to sign the form. Any index-linking and interest earned on repayment will be in accordance with paragraph 6.

36. Payment will normally be made by direct credit to a bank account (including a National Savings Bank Investment Account) or building society account you nominate in the instructions to cash in. The Director intends to use the Bankers’ Automated Clearing Service (BACS) for this purpose, but reserves the right to use a different means of electronic transfer.

37. The date a Certificate is cashed in will be taken to be the date on which, in the normal course, the payment would be credited to the nominated account following initiation of the electronic transfer by the Director. In the case of BACS, this is normally two banking days after the Director initiates the transfer.

38. Where the Director initiates an electronic transfer properly, neither he nor the Treasury will be liable for:
(a)  any failure or delay of the receiving bank or building society in crediting the nominated account;
(b)  any failure or delay in any part of the electronic transfer process which is beyond the Director’s direct control;
including any failure which occurs because the specified account is incapable of receiving the electronic transfer.

39. In exceptional circumstances payment can, on request, be made by crossed warrant (like a cheque). In such cases the date a Certificate is cashed in will be taken to be the date on the warrant.

40. Instead of payment by electronic transfer or warrant the proceeds of encashment may be reinvested in any Issue of National Savings Certificates (Fixed Interest or Index-linked) then on sale (subject to the relevant terms and conditions) and the date of encashment and of reinvestment will be deemed to be the date of purchase on the new certificate of investment.

41. Although NS&I will normally initiate the electronic transfer (see paragraph 37), put the warrant in the post, or carry out the reinvestment, within eight working days of receiving the instructions to cash in this cannot be guaranteed and it is advisable to apply as early as possible.

42. Payment in respect of a Certificate held by a child under 7 years of age will only be made to a person who satisfies the Director that he or she is a proper person to receive payment.

43. Part of the current value of a Certificate may be cashed in or reinvested as in paragraphs 35 - 42. The value repaid or reinvested will be made up of part of the purchase price of the Certificate, together with any index-linking and interest that part has earned. A replacement certificate of investment, showing the original date of purchase and the balance of the purchase price remaining, will be issued.

Retention after the fixed rate term

44. After the original term (or any further term for which index-linking and/or interest is earned under this paragraph), a Certificate may be eligible to earn index-linking and/or interest for a further term of the same length. The Treasury will decide whether this will apply and if so, on what terms as to index-linking and/or interest. The Director will write to the holder, at the last recorded address for the holding, shortly before the end of each term to tell them of the Treasury’s decision. If such index-linking and/or interest does apply it will be applied automatically and will be guaranteed for the whole of the further term but, of course, the holder will remain free to cash in the Certificate at any time (including for reinvestment into another Issue or another NS&I product).

Regulations

45. As at 1 October 2007, The Savings Certificates Regulations 1991 (Statutory Number 1991/1031) have been amended by the following Statutory Instruments:

1992/2835	1992/3115	1993/3133	1994/343	1997/1859	2000/3110
2004/1662	2005/2078	2005/2114

Law and jurisdiction

46. These terms and conditions and any agreement made on the basis of them will be governed by and interpreted in accordance with English law.

47. Subject to paragraphs 48 and 49, the courts of England are to have exclusive jurisdiction to settle any dispute (including claims for set off and counterclaims) which may arise in connection with these terms and conditions or any agreement made on the basis of them and which, subject to the Regulations, falls to be determined by a court of law.

48. Where section 16 of the Civil Jurisdiction and Judgments Act 1982 applies the relevant court of law of the relevant part of the United Kingdom shall have jurisdiction to settle any such dispute.

49. Paragraphs 47 and 48 are included for the benefit of NS&I. Accordingly NS&I retains the right to bring proceedings in any other court which has jurisdiction to whose jurisdiction the holder irrevocably submits.

Savings Certificates
National Savings and Investments
DURHAM
DH99 1NS

1 November 2007

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