Demand forces NS&I to pull index-linked savings certificate

The Government-backed group’s index-linked savings certificate, which helps people stop the value of their savings from being eroded by inflation, was launched with a flurry of interest four months ago.

It has been pulled because NS&I was in danger of breaching the limit for the amount of money it is allowed to raise, known as its net financing target.

Chief executive Jane Platt said there had been nearly 500,000 transactions involving the latest issue of index-linked savings certificates.

She added: “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.”

The last time the product was launched it was on sale for three months before it became so oversubscribed the group had to pull it. Demand for the latest product soared as a result of high inflation, which has left savers struggling to find accounts paying a high enough interest rate to enable them to make a real return on their money.

The inflation-linked savings certificates paid a tax-free return each year based on the Retail Prices Index (RPI) measure of inflation, plus interest of 0.5 per cent, meaning savers are making a return on their money in real terms.

Ros Altmann, Saga director general, said the decision to withdraw the bonds from sale was “another bitter blow for Britain’s battered savers”.

She added: “With RPI running at 5 per cent and expected to rise higher in coming months, there will be many savers who will suffer significant falls in their purchasing power – especially those who are nearing or already in retirement and relying on their savings.”