NS&I ‘link­ers’ to pay lower rate of in­ter­est

The Sunday Telegraph - Money & Business - - Fame & Fortune - Adam Williams

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.

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