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NS&I interest rate reductions

As you may be aware, NS&I recently announced interest rate reductions, effective from 24 November 2020, that will apply to NS&I’s variable rate products and some fixed term products. The Premium Bonds prize fund rate will also be reduced and apply from the December 2020 draw.

Please see below for the statement they issued:

  • NS&I must strike a balance between the interests of savers, taxpayers and the broader financial services sector.
  • Changes will ensure NS&I’s interest rates are aligned appropriately against those of competitors.
  • Interest rate reductions will apply to variable rate and some fixed term savings products, effective from 24 November 2020 – with changes to the Premium Bonds prize-fund rate effective for the December 2020 prize draw.

In July this year, NS&I’s Net Financing target for 2020-21 was revised from £6 billion (+/- £3 billion) to £35 billion (+/- £5 billion) to reflect the Government’s funding requirements due to the Covid-19 pandemic. In Q1 2020-21 (April-June), NS&I saw inflows of £19.9 billion and delivered £14.5 billion of Net Financing. Demand for NS&I products has remained at similarly high levels during Q2 (July-September).

The interest rate reductions announced will see NS&I align its savings products against the rates offered by the banks and building societies.

Ian Ackerley, NS&I Chief Executive, said:

“Reducing interest rates is always a difficult decision. In April we cancelled interest rate reductions announced in February and scheduled for 1 May. Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become ‘best buy’ and we have experienced extremely high demand as a consequence. It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.”

Variable rate savings products

ProductCurrent interest rateInterest rate from 24 November 2020 (change in brackets)
Direct Saver1.00% gross/AER0.15% gross/AER (-85 basis points)
Investment Account0.80% gross/AER0.01% gross/AER (-79 basis points)
Income Bonds1.15% gross/1.16% AER0.01% gross/0.01% AER (-114/115 basis points)
Direct ISA0.90% gross/AER0.10% gross/AER (-80 basis points)
Junior ISA3.25% gross/AER1.50% gross/AER (-175 basis points)

Premium Bonds (effective from December 2020)

The Premium Bonds prize fund rate will be reducing by 40 basis points, from 1.40% to 1.00%. The odds of any £1 Bond number winning any prize will decrease from 24,500/1 to 34,500/1. The changes will be effective from the December 2020 prize draw.

Current prize fund rateCurrent oddsNew prize fund rate (from December 2020)New odds (from December 2020)
1.40% tax-free24,500 to 11.00% tax free34,500 to 1

Value of Premium Bonds prizes

Value of prizesNumber of prizes in September 2020Number of prizes in December 2020 (estimate)
£1,000,00022
£100,00074
£50,000149
£25,0002816
£10,0007143
£5,00014083
£1,0002,2041,639
£5006,6124,917
£10030,24426,637
£5030,24426,637
£253,786,4742,790,269
Total:3,856,0402,850,256

Fixed term savings products

On 24 November, NS&I is also reducing the rates on offer for its fixed term investments, by between 90 and 115 basis points. Fixed term investments are not on general sale and are only available to customers who wish to renew an existing investment when it matures. NS&I will write to all holders of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates at least 30 days before their end of their term, outlining their options.

Customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates and whose investments mature on or before 24 November 2020 and who automatically renew into a new Issue of the same term, will receive the previous, higher interest rate. After this date customers who automatically renew into the same term will receive the lower interest rate from 24 December 2020.

However, any customers who choose to renew into a new Issue but a term of a different length, will receive the reduced interest rate effective from 24 November 2020.

Current holdings will be unchanged until they mature and customers do not need to take action now. NS&I will write to all holders of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates at least 30 days before the end of their term.

ProductCurrent interest rateInterest rate from 24 November 2020 (change in brackets)
Guaranteed Growth Bonds(1-year)1.10% gross/AER0.10% gross/AER (-100 basis points)
Guaranteed Growth Bonds(2-year)1.20% gross/AER0.15% gross/AER (-105 basis points)
Guaranteed Growth Bonds(3-year)1.30% gross/AER0.40% gross/AER (-90 basis points)
Guaranteed Growth Bonds(5-year)1.65% gross/AER0.55% gross/AER (-110 basis points)
Guaranteed Income Bonds(1-year)1.05% gross / 1.06% AER0.06% gross / 0.06% AER (-100 basis points)
Guaranteed Income Bonds(2-year)1.15% gross / 1.16% AER0.11% gross / 0.11% AER (-115 basis points)
Guaranteed Income Bonds(3-year)1.25% gross / 1.26% AER0.36% gross / 0.36% AER (-90 basis points)
Guaranteed Income Bonds(5-year)1.60% gross / 1.61% AER0.51% gross / 0.51% AER (-110 basis points)
Fixed Interest Savings Certificates(2-year)1.15% tax-free/AER0.10% tax-free/AER (-105 basis points)
Fixed Interest Savings Certificates(5-year)1.60% tax-free/AER0.50% tax-free/AER (-110 basis points)

Sources:

https://www.nsandi-adviser.com/nsi-reduce-interest-rates-24-november-2020

New Pensioners Bond – Now available

The Pensioner Bonds are now available

See previous post with information

Link to NS&I website – be warned the service might not be available – keep trying !

The new Bonds at a glance;

What are the Bonds?
• Lump sum investments providing capital growth
• Choice of terms – 1-year and 3-year
• Designed to be held for whole term, but can be cashed in early with a penalty equivalent to 90 days’ interest

When do they go on sale?
• January 2015 – exact date to be announced
• Available for a limited period only

Who can invest?
• Anyone aged 65 or over
• Invest by yourself or jointly with one other person aged 65 or over

How much can I invest?
• Minimum for each investment £500
• Maximum per person per Issue of each term £10,000

What about interest?
• 1 Year Bond 2.80% gross/AER* (2.24% after basic rate of tax)
• 3 Year Bond 4.00% gross/AER* (3.20% after basic rate of tax)
• Fixed rates, guaranteed for the whole term
• Interest added on each anniversary

The tax position
• Interest taxable and paid net (with basic rate tax taken off)
• Higher and additional rate taxpayers will need to declare their interest to HM Revenue & Customs (HMRC) and pay the extra tax due
• Non taxpayers, and those eligible to have any of their interest taxed at the new 0% rate (which starts from April 2015), can claim back the tax from HMRC
• NS&I are not currently part of the R85 scheme so we can’t pay the interest gross on these Bonds

 

building your financial future

NS&I Reduces Interest Rates

NS&I has announced that it is reducing the interest rate on three of its variable rate products:

New variable ratesRate Change
Direct ISA1.75% AER-0.50%
Income Bonds1.25% gross/1.26% AER-0.50%
Direct Saver1.10% gross/AER-0.40%

These changes will come into effect on 12 September 2013. They will be writing to the majority of their affected customers to inform them that their interest rate is being reduced.

In future, they will provide 60 days notice of any detrimental interest rate change to our variable rate products.

NS&I sets its interest rates to balance the interests of its savers, taxpayers and the stability of the wider financial services sector. They have taken the decision to reduce the interest rates on Income Bonds, Direct ISA and Direct Saver following our regular review of the savings market, which includes the interest rates payable on comparable products. The reductions reflect the lower interest rates now available elsewhere.

For information on all of their savings and investments and their rates, you can access the Quick Guide,

building your financial future

NS&I Announcement

NS&I is today announcing the latest stages of its programme to simplify and modernise its savings range, and to increase the number of customers transacting directly by post, phone and online.

The key changes are:

  • On 25 May 2013, NS&I will be transferring customers holding the NS&I Cash ISA and T Cash ISA (formerly TESSA-only ISA), which both pay 0.5%, into the NS&I Direct ISA which pays 2.25%. The NS&I Cash ISA and T Cash ISA have been closed to new customers since 2009 and 1999 respectively.The minimum investment amount for the NS&I Direct ISA will also be lowered from £100 to a more accessible £1.
  • From 1 April 2013, customers will no longer be able to make cash investments into NS&I Premium Bonds over the Post Office counter. Customers can still invest in Premium Bonds by cheque and debit card at the Post Office or directly from NS&I by telephone, post, online or standing order.
  • Premium Bond brochures, repayment request forms and reply envelopes will also only be available on request at the counter at all Post Office branches from 1 April 2013 – they will no longer be on general display in Post Office branches.
  • All other NS&I brochures (such as interest rate leaflets) and NS&I customer forms will no longer be available at the Post Office and can be requested by calling NS&I’s UK contact centres or downloaded from nsandi.com

Benefiting the taxpayer

As well as simplifying and modernising its range of savings, these changes will help NS&I reduce its cost to the taxpayer and deliver a 10% reduction in its budget in real terms by 2015 – a requirement set down in the 2010 Spending Review.

For information on all of their savings and investments and their rates, you can access the  Quick Guide,

Source: NS&I

building your financial future

NS&I pulls sales of savings certificates

National Savings & Investments (NS&I) has withdrawn its index-linked and fixed interest savings certificates from general sale, after strong sales of the products threatened its net financing target.

The certificates have been on sale for almost four months. They had been withdrawn from sale previously, in July 2010, after sales of the products exceeded expectation, but were reintroduced in May after NS&I was handed a more generous net financing target in the Budget.

NS&I said it had forecast strong sales of the products, and those expectations had been met. ‘During the almost four months that savings certificates have been on sale, there have been approaching 500,000 transactions into the latest issue of index-linked savings certificates,’ said chief executive Jane Platt.

‘Over this period, we’ve seen significant amounts of money invested into these products. To ensure that we do not exceed the upper end of our net financing target range, we’ve taken the decision to withdraw savings certificates from general sale at this point.’

Sales of the products stopped yesterday. However, they will still be available to existing investors.

NS&I said that on maturity, existing savings certificate investors could keep their investment for another term of the same length, or invest into alternative index-linked or fixed interest certificates.

By by Daniel Grote @ Citywire – on Sep 07, 2011

For more information please contact us at www.conceptfp.com or advice@conceptfp.com

National Savings & Investments – Increases Rates

NS&I (National Savings and Investments) is increasing the prize fund rate for Premium Bonds to 1.50%. The revised interest rate will come into effect from 1 October 2009.

The odds of each £1 Premium Bond number winning any prize will also improve from 36,000 to 1 to 24,000 to 1.

With average luck, this would result in a maximum holder winning 15 times per year, compared with 10 times per year previously.

Instead of paying interest, Bonds are entered into monthly prize draws. (Remember that inflation can reduce the true value of your money over time.)

• A £1 million jackpot every month
• All prizes are free of UK Income Tax and Capital Gains Tax
• Invest from £100 to £30,000
• 100% capital security, as NS&I is backed by HM Treasury

Click here for the National Savings & Investments Website

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