NS&I Index linked certificates to be introduced next FY

chewmylegoff

StevieJ wrote: »

Why do you think that?

the article says this. it is quoted in the opening post.

NS&I confirmed that the bonds will once again be linked to the retail prices index (RPI) measure of inflation, but could offer no further details at this stage.

alanq

For 2010-11 NS&I's target was 0 + or - £2 billion and it quickly exceeded the higher figure.

For 2011-12 NS&I's target is £2 billion + or - £2 billion.

With high demand for indexed certificates anticipated it would be fairest if they start with a low maximum holding per customer and see how it goes rather than letting fewer people pile in with 2 x £15,000 and then having to stop offering the certificates after a few months. As well as fairness the lower maximum holding would reduce the impact on banks and building societies.

cepheus

papisito wrote: »

For those of us unfamiliar with these bonds, could someone explain to me how they've worked in the past? Are they fixed-term bonds? Over what term? What access do you get to it?

Thx in advance

Edited from Wikipedia

Index-linked Savings Certificate bond terms are typically 2,3 or 5 years. The returns are linked to the Retail Price Index (RPI currently 5.5%) usually the higher measurement of inflation, with a small percentage on top (typically about 1%). This encourages bonds to be held to term with higher return over inflation in the later years.

Bonds can be cashed in at any time. However, bonds cashed in the first year sacrifice their increases to date and return only the initial deposit. Bonds cashed in beyond the first year yield the RPI indexing and premiums up to that month.

Index-linked Savings Certificates are free from UK income tax making them relatively attractive to tax-payers, particularly higher rate tax-payers. They are backed by the Treasury of the UK Government so are considered to be safe deposits. The bonds come in issues. Each issue has a per person investment limit, currently 15000 pounds. They can also be rolled over at the end of the term.

StevieJ

Savings_Dave wrote: »

Wasn't there talk/rumours of them using CPI instead? RPI tends to be the real measure of inflation apparantly or am I wrong?

I am surprised if it is to be RPI, the govt seem to be moving most things onto CPI.

cepheus

They have specifically said it will be RPI, read the OP, but there is nothing against them issuing a bond with RPI+.1% for example. This might make it equivalent to being linked to CPI, relative to previous bonds.

StevieJ

cepheus wrote: »

They have specifically said it will be RPI, read the OP, but there is nothing against them issuing a bond with RPI+.1% for example. This might make it equivalent to being linked to CPI, relative to previous bonds.

Correction, the Daily Mail say they have said it

Masomnia

I'd guess maybe they'll keep it on RPI because Index-Linked gilts are linked to RPI. Maybe. Who knows?

Biggles

StevieJ wrote: »

Correction, the Daily Mail say they have said it

It has also been reported a couple of times on the BBC that NS&I have stated that the RPI will be used.

StevieJ

Biggles wrote: »

It has also been reported a couple of times on the BBC that NS&I have stated that the RPI will be used.

I think Masomnia provided the logic.

whu

I think thery won't bring it in until they think RPI has peaked

It was a disgrace when they withdrew these products blast year - they did it they say because they had enough money due to the high demand - but they could have withdrawn other NSI products and kept this which would be better for savers - instead they caved into the banks pressure as banks couldn't compete with these rates and didn't like the competition and wanted people to save with their paltry rates - so much for all being in it together and benefitting people who bother to save!!