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‘High demand’ for NS&I Savings Certificates

‘High demand’ for NS&I Savings Certificates

Category: Savings

Updated: 14/07/2011
First Published: 14/07/2011

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 It is now over 6 months old so the content may be out of date.

NS&I's Savings Certificates that pay above inflation have attracted 'high demand' since they were launched.

The Government backed provider reintroduced the savings accounts in May, and has said that it expects the certificates 'to remain on sale for a sustained period'.

The certificates are linked to Retail Prices Index inflation, which fell from 5.2% to 5.0% on Tuesday.

As it was given a target of £2 million net financing for the 2011/12 year – meaning more money must come into the institution than leave it – NS&I said it needs to see around £14 billion inflow of funding.

The Savings Certificates are expected to form a significant part of the total, and have caught the imagination of the public at a time when inflation is more than double the Government's long term target of 2%.

"As our provisional first quarter results show, demand for Savings Certificates has been high; however, we have planned for this and believe that we can keep them on sale for a sustained period," Jane Platt, chief executive, NS&I, said

"We monitor sales across all of our products to ensure we continue to strike the right balance between the interests of our savers, taxpayers and the stability of the wider financial services market.

"In spite of the strong public demand for Savings Certificates our market share actually remained stable against the previous year."

Figures show that the provider saw inflows of £6.5 billion from April to June, with £3.6 billion withdrawn.

Last month, the Building Societies Association claimed that it had seen mutuals' total deposits fall because people had moved their money to the inflation linked accounts.

As well as NS&I's index-linked certificates, the Post Office and Birmingham Midshires also have savings products linked to inflation.

The combination of a high rate of inflation and low interest rates has eroded many a savings pot in recent years.

Action group Save Our Savers recently wrote to all nine members of the Bank of England's Monetary Policy Committee to urge them to increase the Bank rate from 0.5% to attempt to combat high inflation.

The group said that £50 billion has been eroded from savings in the last year alone because of inflation and low rates.

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