Personal Finance

NS&I product rolled-out for second time

A popular savings product has been relaunched 10 months after National Savings and Investments withdrew it amid high demand.

Inflation Beating Savings re-enters the market as many people are left watching helplessly while inflation chips away at the value of their savings.

But with the Government-backed group's Index-linked Savings Certificate paying a return linked to the Retail Prices Index, it is thought savers will welcome the announcement.

However, one thing has changed since the product was last rolled out - it will no longer be available as a three-year term.

Instead, NS&I is offering it for a five-year term only in a bid to keep it on sale for as long as possible.

Savers can invest up to £15,000 into one of the certificates, and will receive a tax-free return each year based on RPI inflation and fixed interest of 0.5%.

Last time the product was launched it was on sale for only three months before it became so oversubscribed that NS&I had to pull it.

BM Savings is the only other provider that currently offers an inflation-linked savings product, after Yorkshire Building Society and the Post Office both withdrew theirs.

The savings provider, which is part of Lloyds Banking Group, offers a higher rate of interest than NS&I at 1.5% a year, but the product does not have the same capital guarantee that NS&I does.

The latest issue of the Index-Linked Savings Certificate, which will be available direct from NS&I only, is slightly less competitive than the previous one, paying interest of just 0.5%, compared with 1% previously.

Jane Platt, chief executive of NS&I, said: "Our aim is to keep savings certificates on sale for a sustained period of time and to enable as many savers as possible who wish to invest to do so.

"With this in mind we will be offering a five-year term, only available direct from NS&I. We understand fully that we will see very high demand for index-linked savings certificates."

NS&I is also re-issuing its Fixed Interest Savings Certificates, which pay interest of 2.25% a year.

Sam Jackson

Money Dashboard