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NS&I pulls the plug on index linked savings

NS&I pulls the plug on index linked savings

Category: Savings

Updated: 07/09/2011
First Published: 07/09/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Savers have been dealt a blow with the news that National Savings & Investments (NS&I) has withdrawn its savings accounts that pay above inflation.

The Index-linked Savings Certificates were relaunched four months ago, and offer savers a rate of the retail prices index plus 0.5%.

However, because they are backed by the Government there is a limit on how much can be taken in deposits to ensure that the accounts do not swamp the savings market.

The accounts have proven especially popular as they are considered to be secure by the public and pay attractive rates of interest.

In the four months that the inflation linked accounts have been available, 500,000 people have saved into them.

Since Chancellor George Osborne announced that the accounts would become available once more, savers have been able to invest between £100 and £15,000.

NS&I has said that new sales over the phone ended on Tuesday evening, while applications made by post will be valid if they are received today.

All other applications received after midnight tonight will be turned away.

Jane Platt, chief executive of NS&I, said that the Government-backed provider was in danger of exceeding its net financing target of £2 billion because of the volume of sales the accounts were attracting.

The announcement comes after Birmingham Midshires pulled its three and five year inflation linked products at the end of August.

There are still a couple of options for savers looking to shelter their savings from inflation, with the Post Office and Cambridge Building Society offering inflation-linked bonds.
However, with NS&I pulling its accounts, other providers may look to follow suit in the near future.

"Today's news will come as a disappointment for savers looking to shelter their funds from the effects of inflation," said Rachel Thrussell, savings expert at Moneyfacts.co.uk.

"However, the announcement is not totally unexpected as NS&I has strict limits on the amount of deposits it can accept.

"There are still a couple of options for savers looking to protect their savings against inflation, but they should act fast as these may not be around for much longer."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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