National Savings & Investments have withdrawn their Savings Certificates for sale with immediate effect.
This applies to their current issue of Savings Certificates, both Index-Linked and Fixed-Interest Savings Certificates.
The decision to withdraw these savings products comes as a result of big inflows of money into these products in recent months, something that risks N&SI failing to meet their Net Financing Target. This is a target set by government, to balance the interests of savers and the taxpayer.
For the 2010/11 financial year, the Treasury has set this Net Financing Target at zero, within a range of £2 billion either side. Withdrawing these products from sale suggests they were coming close to breaching the upper range of this limit.
Existing savers with NS&I Savings Certificates will still be able to rollover their investment into the same issue on maturity. They will also be able to invest into another type of Savings Certificate, so existing investors are pretty well catered for.
At the same time, N&SI have reduced the interest rate payable on their Direct Saver and Income Bonds by 0.25%.
The savings products from National Savings & Investments only rarely offer the most competitive rates, but savers are drawn to them for their capital security. All money with this institution is guaranteed by HM Treasury.
Savers should note that the level of protection for savings under the UK Financial Services Compensation Scheme (FSCS) is set to increase from £50,000 to €100,000 by the end of this year, due to a recent ruling by the European Commission. It has also proposed that faster compensation payments are made, resulting in all depositors being reimbursed within seven days of a bank failure.
