NS&I ‘linkers’ to pay lower rate of interest
Half a million savers desperately trying to protect their cash from inflation will see their returns slashed in the new year. NS&I, the government-backed savings provider, will change the way it calculates interest for customers who hold its Index-linked Savings Certificates, meaning reduced returns for 507,000 savers.
From May 1 next year, account holders who choose to renew their certificates will have their returns linked to the Consumer Prices Index (CPI) measure of inflation instead of the Retail Prices Index (RPI). The CPI tends to be much lower.
If the change were implemented at today’s rates of inflation, savers would see their rate cut from 3.31pc to 2.41pc, as they receive 0.01pc over the rate of inflation. This would cost someone with £25,000 saved more than £200 a year in interest.
NS&I blamed the change on the reduced use of RPI across government organisations and the need the need to consider the wider market when it set interest rates.
Savings certificates have not been on sale to new savers since 2011 but existing holders can roll then over.