Savings: No quick return for NS&I Index Linked Certificates


Savings: No quick return for NS&I Index Linked CertificatesNational Savings & Investments (NS&I) have confirmed that their Index Linked Certificates are “highly unlikely” to be returning this year.

On the same day that CPI (Consumer Prices Index) inflation surprisingly rose this news will come as a blow to savers struggling to get a real, above inflation, return on their savings.

Inflation linked savings accounts

NS&I Index Linked Certificates provide a guaranteed return above inflation, measured by RPI (Retail Prices Index), with the interest payable being tax free.

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Furthermore, unlike other inflation linked savings accounts , the interest from them is tax free; making them an extremely popular product with savers.

However, the certificates were withdrawn from sale last year, just four months after being reintroduced, as NS&I looked set to breach its’ ‘Net Financing Target;.

NS&I ‘Net Financing Target’

NS&I have a ‘Net Financing Target’ set each year by the Treasury. The ‘Net Financing Target’ governs how much money can be raised and is used to try and ensure that NS&I does not gain an unfair advantages over banks and building societies.

NS&I have said that the ‘Net Financing Target’ for 2012/13 is too low for the Index Linked Certificates to be reintroduced.

Gill Stephens from NS&I said: “Last year our Net Financing Target was £2 billion, which meant we could put Index-linked Savings Certificates back on sale.”

She continued: “Given our 2012/13 target is to deliver £0 Net Financing, we do not expect to be able to reintroduce Index-linked Savings Certificates in the coming financial year.”

Inflation linked savings

Savers will greet this news with dismay as the NS&I Index Linked Certificates offered a guaranteed way to get an inflation beating return.

Currently, following today’s rise in CPI inflation, basic rate tax payers need to tie up their savings for four or five years to get an inflation beating return. There are no accounts which will give higher rate tax payers an interest rate above inflation.

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