The state-owned savings bank – currently known as National Savings & Investments – is rightly trusted for safeguarding our money.
This is particularly so in times of economic difficulty when so many financial institutions are risking and losing millions of pounds.
Investors turn to the state body for reassurance that their money is safe.
How sad to discover that NS&I (as it likes to market itself) is only nominally safeguarding people’s assets.
It will hold your money and return it upon demand but not pay a proper rate of interest, effectively devaluing the saving.
The bank was founded by the Palmerston Government in 1861 as the Post Office Savings Bank. Palmerston was the oldest Prime Minster in history to take up office for the first time.
He created the world’s first postal savings system which is today an executive agency of the Chancellor of the Exchequer.
All deposits are 100 per cent guaranteed by HM Treasury. This is one of the key reasons why depositors flock to it.
One of its most popular arrangements is the fixed interest savings certificate. Yet those which matured before October 8, 2001 are sadly losing their value at a rapid rate.
Instead of being ‘rolled over’ into a new issue as currently happens, the certificates receive interest at the ‘general extension rate’, which is currently 0.09 per cent.
The words used to defend such action is that the terms stated the certificates could not be rolled over when they were purchased. Yet the Chancellor’s bright boffins could certainly come up with some compensating terminology.
This does not affect just a few savers. No less than 600,000 holdings worth £560m are still receiving such a pittance.
Whilst NS&I apparently write to savers when their certificates mature and annually, it should realise that many holders have moved home, may now be elderly and perhaps slightly confused, trusting that their investment is keeping pace with inflation.
With inflation falling last month to 2.5 per cent, NS&I could at least match the rate of 2.25 per cent paid on its most recently issued five-year certificates.