NS&I ditches savings certificates
National Savings & Investments (NS&I) has scrapped its tax-free savings certificates and slashed the interest rate it pays to more than 250,000 pensioners on its income bonds.
The move is a huge disappointment to savers. NS&I, which is backed by the Treasury, decided to axe the certificates and reduce the rates on its income bonds after higher than expected demand.
The NS&I three and five-year Index-Linked Savings Certificates offered a rate of inflation (as measured by the Retail Prices Index, rather than the Consumer Prices Index) plus 1%.
NS&I two-year and five-year Savings Certificates, which have been on sale for nearly 100 years, have also been closed to new savers.
Jane Platt, chief executive of NS&I, said the decision to close savings certificates had been “difficult” but it is a “temporary” one.
At the same time, NS&I has cut the interest rate it pays to 254,000 on Income Bonds by 0.25 percentage points.
It now pays 1.16% after tax (1.45% before) on balances up to £25,000 and 1.4% (1.75%) on higher amounts. Its Direct Saver rate is also down by the same amount to 1.4% (1.75%).
Savers put £5.4 billion into NS&I between April and the end of June this year, up a huge 69% on the £3.2 billion in the same quarter last year.
The 1.3 million savers who already have Index-Linked and Fixed Rate Certificates are unaffected by the move. They can reinvest their money in other certificates when their current issue matures.