Index-linked Savings Certificates are British inflation linked bonds from National Savings and Investments, the state-owned savings bank in the United Kingdom. The bond terms are typically 2, 3 or 5 years. The returns are linked to Retail Price Index (RPI) with a tiny added interest rate on top. The Bonds can now only be cashed in at maturity.
Index-linked Savings Certificates are free from UK income tax making them relatively attractive to tax-payers, particularly higher rate tax-payers. They are backed by the Treasury of the UK Government so are considered to be safe deposits. The certificates used to be informally known as "Granny Bonds" because they were originally only available to savers who were over the retirement age. This is no longer the case.
Issues The bonds come in issues. Each issue has a per person investment limit, which as of 2011 was £15,000.
+ 3 Year Issues Date Issue Return 19 July 2010 withdrawn N/A 7 April 2010 20th Issue RPI + 1.00% 29 April 2009 19th Issue RPI + 1.00% 18 June 2008 18th Issue RPI + 1.00% 21 May 2008 17th Issue RPI + 0.70% 2 April 2008 16th Issue RPI + 0.25% 25 April 2007 15th Issue RPI + 1.35% 26 October 2006 14th Issue RPI + 1.15% 20 May 2006 13th Issue RPI + 1.05% 13 April 2006 12th Issue RPI + 0.90%
+ 5 Year Issues Date Issue Return 7 September 2011 withdrawn N/A 12 May 2011 48th Issue RPI + 0.50% 19 July 2010 withdrawn N/A 7 April 2010 47th Issue RPI + 1.00% 29 April 2009 46th Issue RPI + 1.00% 18 June 2008 45th Issue RPI + 1.00% 21 May 2008 44th Issue RPI + 0.70% 2 April 2008 43rd Issue RPI + 0.35% 25 April 2007 42nd Issue RPI + 1.35% 20 May 2006 41st Issue RPI + 1.15% 13 April 2006 40th Issue RPI + 0.95%
+ 2 Year Issues Date Issue Return 13 April 2006 ?th Issue RPI + 0.85%
On 19 July 2010, due to high investment levels the certificates were withdrawn from general sale in order to keep investments within the financing target set by HM Treasury. After re-introduction in May 2011, this happened again on 7 September 2011.
References
External links Index-linked Savings Certificates Homepage. Past Issues from InvestmentGuide. UK Inflation and Where to find RPI data from the Office for National Statistics. NS&I Index-Linked Savings: Q&A from The Daily Telegraph.