Government-backed National Savings & Investments (NS&I) have announced that they've pulled two popular inflation-beating products and slashed rates on other products after seeing record inflows of cash.
NS&I, whose profits go to the Treasury, said it saw £5.4 billion in gross inflows during the three months to the end of June - the highest for the first quarter of its financial year since comparable records began. (full story can be found here)
The withdrawal of these investments is a bitter blow to savers, and in particular pensioners. Regular readers were already aware of the benefits of inflation linked national savings certificates from my post Money tip #30 – One way to protect your savings from inflation, both tax and risk free. With today's record low-interest rates coupled with inflation running at 5%, index-linked certificates offered a risk-free alternative to term based bank deposits - but with tax-free returns guaranteed to beat inflation. These products would have been particularly popular with pensioners living off their savings - but alas all good things come to an end. (More than likely as a result of increased demand from high rate tax payers for whom they offered a great tax saving opportunity)
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