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Ns&i Index-Linked Saving Certificates


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Haven't seen this elsewhere, apologies if I've missed it.

For those lucky enough to have ILSC from NS&I, there are some changes to all certificates which are rolled over on maturity from 20th September.

Penalty for cashing in early will be 90 days' interest and loss of index-linking for that year.

Minimum balance will be £100, no idea what it was before.

Single rate of interest. Instead of having the baffling return of "index-linking + (a gradually increasing percentage each year which gives an average rate of X%)" it will just be "index-linking + 0.25%" each year. Don't be fooled by the info booklet they send you, the "example" says 0.5% but you will get 0.25%.

There are fewer options when renewing. As far as I can make out that means you can cash in or renew for either a 3 or 5 year term. You will no longer be able to convert to fixed-rate bonds.

The good news is that you will now get annual statements and you can manage the certificates online or by phone. Joint holders can combine their investment allowance (I'm not sure why people didn't just each buy their allowance). You will now need to be 16 or older to invest.

Those seem to be the highlights of the booklet. I can't find the same information online yet.

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Haven't seen this elsewhere, apologies if I've missed it.

For those lucky enough to have ILSC from NS&I, there are some changes to all certificates which are rolled over on maturity from 20th September.

Penalty for cashing in early will be 90 days' interest and loss of index-linking for that year.

Minimum balance will be £100, no idea what it was before.

Single rate of interest. Instead of having the baffling return of "index-linking + (a gradually increasing percentage each year which gives an average rate of X%)" it will just be "index-linking + 0.25%" each year. Don't be fooled by the info booklet they send you, the "example" says 0.5% but you will get 0.25%.

There are fewer options when renewing. As far as I can make out that means you can cash in or renew for either a 3 or 5 year term. You will no longer be able to convert to fixed-rate bonds.

The good news is that you will now get annual statements and you can manage the certificates online or by phone. Joint holders can combine their investment allowance (I'm not sure why people didn't just each buy their allowance). You will now need to be 16 or older to invest.

Those seem to be the highlights of the booklet. I can't find the same information online yet.

Thanks for the info.

That's better than the last lot isn't it? The +0.25% was phased in gradually over years not added each year?

Not being able to switch to fixed rate bonds is no loss given how low the rates would be. Losing index linking on withdrawal is obviously only an issue if you need to withdraw.

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I'm getting 1% plus rpi so a big reduction to 0.25, well at least with the extra money they will be getting it will help the government.

Savers are getting hammered everywhere just seen that Halifax have reduced their cash ISA from 4.1% to 3.8% on the 3 year option similar reductions on all its fixed rates best now is 4% for 5 years.

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Still a lot better than Premium Bonds, I think the total prize pot of PB's is now down to just 1.5%, strip out the big prizes that you and I are never ever going to win, and you're probably left with a realistic tax free return of about 1%. Even for a 50% taxpayer this makes no sense at all.

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Still a lot better than Premium Bonds, I think the total prize pot of PB's is now down to just 1.5%, strip out the big prizes that you and I are never ever going to win, and you're probably left with a realistic tax free return of about 1%. Even for a 50% taxpayer this makes no sense at all.

Better than a deposit on a BTL. ;)

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I'm getting 1% plus rpi so a big reduction to 0.25, well at least with the extra money they will be getting it will help the government.

Savers are getting hammered everywhere just seen that Halifax have reduced their cash ISA from 4.1% to 3.8% on the 3 year option similar reductions on all its fixed rates best now is 4% for 5 years.

"Funding for lending" is our taxes being used to give cheaper lending to banks so they don't have to pay us more interest on our savings. Rates had started rising until the latest stealing from savers scheme.

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With the promised deflation not forthcoming or even 2% (yet) .25% over inflation tax free looks reasonable, and hell it wouldn't really matter if we got deflation because the certificates are pegged at .25% per annum come what may and would actually be doing even better in real terms.

Compare it to Treasuries, with 2.5% index linked treaury stock having a negative real yield *right through to 2024 and probably beyond that, so for those that want peace of mind these can't be beaten. Got three tranches myself of 15K plus accrued interest at 1%, 0.5% and 0.25% respectively as the re-investments have gradually attracted lower rates.

*What idiots are still buying Treasuries at negative yields? what idiot would pay over a pound for an undated 3.5% war stock, about 29p in the 1980s. Fair play though to those that spotted the bond bubble about five years ago on the launch pad to Pluto (I certainly didn't book my passage in time), but it will crash on arrival. National Savings by contrast continue to be a good hold.

Edited by crashmonitor
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"Funding for lending" is our taxes being used to give cheaper lending to banks so they don't have to pay us more interest on our savings. Rates had started rising until the latest stealing from savers scheme.

Hate to quibble, but the FLS is not being funded through taxes. The Bank of England is funding the scheme through the issuing of T-bills.

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i'm lost here because i got my issue ages ago, will it keep rolling over if i just leave it...? my plan was to just leave it for when i'm old, hope that isnt wishful thinking...

never had a statement or anything, dont know what is going on with it.....

[/quote

If you go to the website, it will give you a valuation.

Takes a bit of hunting down, but its there.

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i'm lost here because i got my issue ages ago, will it keep rolling over if i just leave it...? my plan was to just leave it for when i'm old, hope that isnt wishful thinking...

never had a statement or anything, dont know what is going on with it.....

They are 3 or 5 year issues. If you have one longer than that you should have got a letter when it matured. Make sure they have your correct address.

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  • 2 months later...

Just got my "changes" letter today. NSandI are trying to make the bonds less and less attractive to discourage people rolling over their money. I suspect we will see further erosion of the benefits as the savings market deteriorates further. I wouldn't be surprised if the linking was reduced to RPI + 0%, or even CPI, for the next issue of rollover bonds. They may even withdraw them altogether.

For these reasons I have been taking the 5-year rollover option as my bonds have matured.

On a more positive note, the annual update is an improvement.

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  • 1 year later...

Today, I received an email from NS&I telling me they are lowering their ISA rate from 1.75% to 1.5% AER from Feb 2014. This will happen at a time when other interest rates should be rising following the FLS changes. This leads me to hope there will be a net outflow of funds from various uncompetitive NS&I accounts early next year, while official funding targets are rising again (see below). This might just pave the way for the re-introduction of index linkers at the start of the next financial year.

This Telegraph article offers additional detail: NS&I funding change could boost interest rates

In yesterday’s Autumn Statement, the Government increased NS&I’s financing target – the balance of inflows and outflows – to £2bn, with an acceptable range of between zero and £4bn. This is up from a target of zero, as set in the March Budget.
Anna Bowes, director of rate monitoring website Savingschampion.co.uk, said NS&I is unlikely to reintroduce its index-linked savings certificates, which were extremely popular because they guarantee to rise in line with inflation on the Retail Prices Index.

She said index-linked certificates would “sell out in a flash” because there are very few products available that match inflation, but NS&I would be reluctant to offer them if it is already raising enough money from savers.

“Index-linked certificates would fly off the shelves, but by the look of it NS&I does not need to do this, or boost its rates in the short-term, because it is still bringing in a lot of money at the current lower rates,” she said.

An NS&I spokesman said it definitely will not reintroduce these products this financial year and declined to comment on whether they will be offered in 2014/15.

But the yield on gilts – the other source of Government funding – increased this year, making it £351m more expensive for the Government to raise the equivalent finance through gilts than through NS&I deposits. As a result, the Government increased the amount NS&I can raise.
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  • 2 months later...

Just had the maturity instructions for a March 09 15k tranche, maturing next month based on the January 14 RPI index. From memory the annual rate of interest over the five years was 4.82%, or inflation at 3.82% +1%.

One of my better calls because at the time the RPI was headling deflation and it looked like a bad buy. However, I was aware of a huge leap in inflation to February 2009, so I was buying into that.

I will be renewing at inflation +0.005%. RPI is over stating inflation imo, CPI looks more reliable.

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  • 2 months later...

I will be renewing at inflation +0.005%. RPI is over stating inflation imo, CPI looks more reliable.

I expect future index-linked bond issues to be linked to CPI rather than RPI. The Office for National Statistics no longer publishes RPI as an official statistic. I have a whole clutch of NSandI linkers which have made an excellent alternative to cash savings, but I expect the gentle erosion of benefits to continue. My first issue was at RPI +1%, with little penalty for early redemption. More recent ones seem to be RPI + next to nothing, with more punitive terms should one wish to exit before the designated term.

Of course, with the benefit of hindsight I should have been more heavily weighted towards equities, but in 2008/9 the world looked very scary!

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I expect future index-linked bond issues to be linked to CPI rather than RPI. The Office for National Statistics no longer publishes RPI as an official statistic. I have a whole clutch of NSandI linkers which have made an excellent alternative to cash savings, but I expect the gentle erosion of benefits to continue. My first issue was at RPI +1%, with little penalty for early redemption. More recent ones seem to be RPI + next to nothing, with more punitive terms should one wish to exit before the designated term.

Of course, with the benefit of hindsight I should have been more heavily weighted towards equities, but in 2008/9 the world looked very scary!

You may be right, I've received another couple of maturities this week and I had to pore through the leaflet in detail to get past the multiple references to index-linking to find the one sole reference that said it was still to RPI.

I'm expecting any new issues to be CPI, when they start applying it to maturities as well then I'll start taking them and worry about where to put the money afterwards.

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  • 1 month later...
  • 2 months later...

Got a maturity letter this morning on a 3 year.

A renewal is Index Linking + 0.05% and from now on there is a penalty for early closure. 90 days interest on the amount cashed in and no index-linking for the whole certificate in the investment year you cash in.

Still looking good, though I don't expect the RPI to hold at 2.5% and give a return of 2.55% tax free over the next year. But that's fine...inflation is the savers enemy after all. got my linkers at three levels now.... RP1 +1.0%, 0.5% and 0.05%.

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