NSANDI change rules on ILSCs & ban early withdrawal

boingy

I think it would be unfair if they were changing the terms of the current holdings but they are free to do so for renewals as long as they let holders know. If you don't like it, cash 'em out and put the money elsewhere. One thing's for sure - they won't be changing their mind. 

spider42

Are you still able to renew into a certificate of a different length, as you were previously? If so, it might make sense for those with 5 year certificates to renew into the 3 years ones. Although I suppose that has its own risk if they decided to stop offering renewals at all in the future, and you may be forced out after only 3 years instead of 5!

dunstonh

For those it does affect I think it's more of a deal.  For example, anybody who was using these as their emergency fund.

They are not designed to be an emergency fund.   Or at least, not the first bit of the pecking order.  

I was reading that there is still £22bn invested in these.  That is a lot of money and risk to the Government if it was to be drawn at short notice.   Fixed term maturity points allows them to mitigate that risks.

wmb194

Over time the terms on index linked gilts have varied as well. It's inevitable that they will but if the terms no longer suit you just have to move on.

Albermarle

Rollinghome said:

artyboy said:

So I rather suspect to the vast majority of us without those bonds, that sounds like holy grail of savings, and you'd be absolutely nuts to withdraw, even in years of lower inflation.

Memories can be short. We've recently had several years of "financial repression" with savings rates below inflation in order to massage down the cost of government borrowing. So the advice of late has to always hold on.

The advice on ILSCs tended to be different when we had negative inflation and high interest rates.  For example, RPI was negative throughout most of 2009 while savings rates close to 7.00% were available.

ILSCs can be a useful insurance for some, but don't assume they'll always better ordinary savings rates, even over significant periods.  The exact numbers will depend on the individual tax position, but who knows what the smart position will have been over the next five years.

The smart position is to usually have a mix of short term savings and longer term savings and a diversified range of investments. These inflation linked bonds fit in well to a balanced portfolio whether they are paying badly like in earlier years, or paying well like now.

FIREDreamer

I probably won’t renew them now, just use them to fill my ISA.

Tying money up for 3 or 5 years with no withdraw option for an unknown (albeit a real, just about) return doesn’t sound like a good idea.

The government forcing a soft closure of the product I suspect.

Good returns the last 2 years but all good things come to an end.

Stubod

Ta for the heads up, certainly gives food for thought??
Historically, on renewal we always increased ours up to the 5 year max, however as we are getting older we have started to drop them down to the 3 year option.
We will now be considering taking the "profit/gain" out at the next renewal and just leaving the original £15k in...assuming that is still an option??

GeoffTF

JamesRobinson48 said:

This is all very well, but what happens if the ILC holder dies?   Would NS&I permit prompt account closure, if so on what terms?  Also, can ILCs still be inherited as used to be the case some years ago?  TIA for wise insights on these two points.

Yes, they can be inherited. The T&C's do not say that they can be closed on death.

Rollinghome

Albermarle said:

Rollinghome said:

artyboy said:

So I rather suspect to the vast majority of us without those bonds, that sounds like holy grail of savings, and you'd be absolutely nuts to withdraw, even in years of lower inflation.

Memories can be short. We've recently had several years of "financial repression" with savings rates below inflation in order to massage down the cost of government borrowing. So the advice of late has to always hold on.

The advice on ILSCs tended to be different when we had negative inflation and high interest rates.  For example, RPI was negative throughout most of 2009 while savings rates close to 7.00% were available.

ILSCs can be a useful insurance for some, but don't assume they'll always better ordinary savings rates, even over significant periods.  The exact numbers will depend on the individual tax position, but who knows what the smart position will have been over the next five years.

The smart position is to usually have a mix of short term savings and longer term savings and a diversified range of investments. These inflation linked bonds fit in well to a balanced portfolio whether they are paying badly like in earlier years, or paying well like now.

Ah, the "balanced portfolio". The smart position always depends on individual needs and circumstances, including tax position. Not on simplistic rules.

I've held mid six figures in ILSC going back a long way, but I routinely make the decision on how much to continue holding as circumstances change.

I don't know how old you are, the extent of your assets, or your experience of investment, and you know no more about me or about the OP, but it is a mistake to believe that one size fits all.

ILSCs will suit some portfolios, "balanced" or otherwise, but under the new terms the liquidity will change and the calculation will be  different.

boingy

FIREDreamer said:

The government forcing a soft closure of the product I suspect.

I think this is the truth.