NS&I forced to withdraw index-linked bond
Savers have once again been hit after Government-backed National Savings & Investments (NS&I) has announced its index-linked bond has been withdrawn from the market.
NS&I, which runs Premium Bonds and a variety of savings products, said its index-linked bond (which gives savers protection against inflation) has been pulled.
NS&I’s website and call centres ceased accepting new sales of Savings Certificates yesterday.
However, postal applications received today will still be honoured.
The product has been back on the market for four months and achieved around 500,000 sales during the period.
It has proved to be one of the most popular savings products of recent years and had previously been withdrawn in July 2010, after sales of the products exceeded expectations but were re-launched in May after NS&I was given a more generous net financing target in the Budget.
Rules state that NS&I must not dominate the savings and investments market.
However, with the historically low interest rate environment, NS&I products have proved extremely popular as savers look for somewhere to invest their cash, and the decision will mean limited options for savers.
Commenting, Jane Platt, NS&I chief executive, said: “The volume of sales over the past few months is such that our forecasts show we were at risk of exceeding the top end of the net financing range, so we needed to take action to reduce sales.”
Fixed-interest savings certificates have also been withdrawn from sale by NS&I.
Savers have suffered since interest rates were placed at the historic low of 0.5% in March 2009, when the economy was in the midst of recession.
The record low rate, however, has meant the value of UK savings has been eroded by £50 billion.
However, the Bank of England is widely expected to keep rates on hold at 0.5% until mid-2012 at least, in a bid to stimulate the economic recovery, which appears to be faltering.