NS&I to shaft savers again. RPI to CPI (index linked bonds)

nrsql

RG2015 wrote: »

Are these any help?

https://www.nsandi.com/historical-interest-rates#10

https://www.nsandi.com/files/published_files/asset/pdf/historical-interest-rates.pdf

Sorry - I meant my certificates.
The list of them all with their values used to come periodically (I think when one was rolled over) but now I'm paperless it doesn't seem to.

I took them out in small increments for flexibility so I have rather a lot.

RG2015

nrsql wrote: »

Sorry - I meant my certificates.
The list of them all with their values used to come periodically (I think when one was rolled over) but now I'm paperless it doesn't seem to.

I took them out in small increments for flexibility so I have rather a lot.

Okay, I thought it may be something more specific. I only have recent products and premium bonds but their website is quite comprehensive so they may be there somewhere. Good luck in your search.

short_butt_sweet

Glen_Clark wrote: »

Do you think printing money reduces our debt?

yes, when the printed money is used to buy back gilts.

the gilts that were bought back have effectively been cancelled. the BoE owns those gilts. but the UK owns the BoE. you can't owe money to yourself. the UK treasury pays interest on those gilts to the BoE. and the BoE returns that interest to the treasury. this is just a pantomime.

QE is an asset swap. as a result of QE, there are less gilts in existence, but more cash (to approximately the same value).

cash doesn't count as debt. gilts do count as debt. so what else can we say?

i know this may seem like magic, but look at it this way: not very much is changed by QE. cash and gilts are actually very similar to one another.

both cash and gilts are part of a social contract. in the sense that they are a form in which we can keep savings that the rest of society will recognize as having a value in the future.

cash (in sterling) is IOUs issued by the UK, on which no interest is payable. gilts are IOUs issued by the UK, on which a very low rate of interest is payable.

in some ways, we shouldn't think of gilts as being debt. debt issued by a country which has its own currency, where the debt is denominated in that currency, is not like other forms of debt. there is no issue with ability to pay. and the interest rate is so low that rolling up the interest into the debt doesn't make it spiral out of control.

Depends on the cost they have committed us to. I've heard stories about £100 to change a light bulb etc

there is huge wastage in PFI, both the capital and service parts. both parts should be bought out, for appropriate but not over-generous, compensation. i.e. profit gauging that's already happened may have to be allowed to stand; but there should be no compensation for loss of future rights to change light bulbs for £100.

short_butt_sweet

but to get back to the topic, or least nearer to it ...

IMHO, the current policy of selling no new ILSCs, but letting existing holders roll over their maturing certificates, is indefensible. the aims of NS&I ought to include:

1) offering people a safe home for savings.

on this, they are failing by not offering any index-linked product to people who don't happen to already hold ILSCs.

2) financing part of the national debt at a reasonably low cost.

and they are paying more than necessary on ILSCs, in that they know lots more would be snapped up if they went on general sale. which might be fine, if that were done deliberately to meet aim (1); but they are already failing on aim (1).

3) not undermining tax policy.

ILSCs are far more attractive to people in higher tax brackets. why? i can see no reason at all to offer tax-free products that are specific to NS&I (i am not referring to ISAs from NS&I - that is different, because other providers can offer ISAs).

i think a better approach would be:

a maximum holding of £100,000 in ILSCs. if you have none now, you can put in £100,000 right away. if you have more than £100,000 already, you can keep what you have, but you can't roll any more over when they mature until you get below £100,000.

gains on ILSCs (except for those already issued) will be taxable as interest (subject to the usual allowances for taxable interest).

Uxb

That plan would mean HMG would have to actually pay real money to people whose certificates where being forbidden from being rolled over under your idea.
Which in turn means HMG would have to borrow the money from somewhere else to do so - remember that HMG does not have any money at all - it is all our money either borrowed or taxed.
At the moment most people roll over their holdings in NS&I so although they get interest paid its is paper exercise only in that no real money is actually paid out to the investor. So it's actually costing the government next nothing in real money terms.

C_Mababejive

Well i checked my holdings and i have some maturing in 2021 and one in Feb 19 so at least im buffered up for a few years yet. I cant see interest rates rising dramatically for the next five years as the economy is knackered. As has been said already, they dare not prevent rollover because they have no money to pay out ! Just like banks really. It isnt about money. Its about double standards and hypocrisy.

System

C_Mababejive wrote: »

Well i checked my holdings and i have some maturing in 2021 and one in Feb 19 so at least im buffered up for a few years yet. I cant see interest rates rising dramatically for the next five years as the economy is knackered. As has been said already, they dare not prevent rollover because they have no money to pay out ! Just like banks really. It isnt about money. Its about double standards and hypocrisy.

You moan despite your savings being subsidised by taxpayers:
https://www.thisismoney.co.uk/money/saving/article-1723973/NSI-inflation-bonds-a-subsidy-for-the-rich.html
The government could save money by stopping the rollover of index-linked certificates and the BoE raising the money by issuing gilts.

RG2015

Economic wrote: »

You moan despite your savings being subsidised by taxpayers:
https://www.thisismoney.co.uk/money/saving/article-1723973/NSI-inflation-bonds-a-subsidy-for-the-rich.html
The government could save money by stopping the rollover of index-linked certificates and the BoE raising the money by issuing gilts.

C_Mababejive wrote: »

I'm not sure how much is locked up in index linked products but it must be substantial even by national budget terms and it is real money, not fake money

Yes, but is the OP is getting real money or fake money?

Biggus_Dickus

nrsql wrote: »

>> There is an article behind the Telegraph paywall today which claims a "trick" can be used by existing RPI holders using a "little known perk"

Given that all ILSCs must have been rolled over by now I suspect that "little known perk" is known to everyone to whom it applies.

The last one's sold were May - Sept 2011 5 year, a re-introduction when a lot were taken out.
They will have been rolled over in 2016 to 2021 - the same as a 3 year now.
Wonder if that's a coincidence. Wish I'd started converting to 5 year earlier.

Anyone know how to download a list of the certificates from the NS&I site?

Not sure if this is of help;... I don’t believe there is any ‘download’ facility as such but there is a ‘Print’ facility available within the current ‘valuation page’ for each individual ILS certificate.

short_butt_sweet

Uxb wrote: »

That plan would mean HMG would have to actually pay real money to people whose certificates where being forbidden from being rolled over under your idea.
Which in turn means HMG would have to borrow the money from somewhere else to do so - remember that HMG does not have any money at all - it is all our money either borrowed or taxed.
At the moment most people roll over their holdings in NS&I so although they get interest paid its is paper exercise only in that no real money is actually paid out to the investor. So it's actually costing the government next nothing in real money terms.

you are very confused about how money works (as are most people, to be fair).

what is this "real money"? we use sterling as money in the UK. sterling is IOUs issued by the UK. a ten pound note carries the promise to pay the bearer ... another ten pound note!

where does money come from? since money is IOUs issued by the UK, there is only place it can come from: the UK spending money, which puts those IOUs into people's hands.

taxation takes some of those IOUs back, cancelling them. tax can't come before spending, because nobody would have any IOUs from the UK if it hadn't spent the money into existence first. the process is: spend then tax, not: tax then spend.

to the extent that spending exceeds taxation (as is normal), it can be funded by either cash (just paying people with those IOUs), or borrowing, or a mixture of the two.

after cash has been spent into existence (e.g. £10 is spent, and only £3 comes back it tax, so there is an extra £7 of cash out there), the UK can offer to sell gilts or NS&I products (they are just different forms of borrowing - neither is more "real" than the other). e.g. suppose a new gilt is issued. so if £7 of gilts are offered for sale, somebody buys them for £7 cash. so there is no longer £7 extra cash in existence, and instead there is £7 of extra gilts. this is what was usually done before QE.

but under QE, this process has been reversed. some gilts were bought back by the UK, and more cash issued in their place.

the combination of the usual process of issuing gilts, and QE partially reversing that process, means that the excess of UK public spending over taxation has been funded by a mixture of cash and borrowing since 2009.

don't get the dynamics of the situation wrong. money to be spend by the UK doesn't come from somebody else saving it first. it's spent into existence by the UK spending it. which results in somebody having more savings. the national debt and the national savings are two sides of the same coin.

note: it is true that the UK government doesn't have any money. because it is meaningless for it to hold IOUs issued by itself. just like it's meaningless for me to write out IOUs and keep them in a drawer; my IOUs only matter when i give them to other people. similarly, the UK's IOUs only matter when they're in the hands of somebody other than the UK itself. the only difference between my IOUs and the UK's are that the UK's IOUs are money, and mine aren't. so the UK has the ability to create money by spending it, and i don't: i can offer to pay with my IOUs but they're not widely accepted (why not, eh?!).