Yahoo Finance Two months until 'shocking' NS&I cuts: sign the Telegraph's petition before it's too late
Thousands of people have signed the Telegraph's petition to reverse damaging cuts to one of NS&I's most popular saving accounts.
We're calling on the Government to intervene on behalf of half a million savers who rely on the income from Treasury-backed NS&I's index-linked savings certificates – but we need your help.
A petition with at least 10,000 signatures will get a response from the Government, while 100,000 or more can trigger a debate in Parliament.
As more than half a million people hold certificates, only one in five would need to put their name to the petition to reach the threshold. You do not need to personally hold a certificate to sign the petition. A family of five who all signed would count as five individuals.
Sign the petition here and find out more about how petitions work here.
What's happened?
From May 1, account holders who choose to renew their index-linked savings certificates will see the measure of inflation used to increase returns switched from the retail prices index (RPI) rate of inflation to the almost always lower consumer prices index (CPI).
This superficially minor tweak will be disastrous for the thousands of people who rely on the certificates to support them in retirement.
Income is also free of tax, meaning anyone ditching the certificates for other investments would have to place money into an Isa to retain this advantage. For people with substantial savings it would take a decade or more to move cash inside an Isa – the limit is currently £20,000 a year.
The certificates are one of the most valuable products offered by NS&I, which is best known for its premium bonds.
NS&I said the changes were being made to bring it into line with government departments, which increasingly use CPI. However, as Telegraph Money has highlighted before, the government still uses RPI to increase rail fares and student loans.
How much could you lose?
If the change were implemented based on today’s rates of inflation, savers would see rates cut from 2.51pc to 1.81pc, given savers receive 0.01pc over the rate of inflation. This would cost a saver with £25,000 in an account around £175 a year in interest.
Hundreds of readers have shared how the change will hit them. Many have savings of £500,000 or more, meaning losses will run into thousands of pounds a year.
Some anonymised correspondence from readers is below:
I did not realise this was happening until it was highlighted in Telegraph Money by which time it was too late to renew one certificate from three years to five years. Thanks to the Telegraph article though I have been able to renew two further certificates from three to five year terms. I am vulnerable to losing £2,600 a year by this trick.
-------
My wife and I both have several certificates which mature after next May. Their total value is around £93,000, so our potential loss of interest is significant.
-------
My wife and I have over £600,000 invested in index-linked NS&I certificates. Savings which we have built up over many years.
We were, therefore, shocked to learn from your column that from next May the interest we will receive will be reduced by approximately £6,000 p.a. We always thought of the NS&I as a government institution who would never renege on the terms of their contract with the public. Also, we understand that most civil servant’s pensions are index-linked.
-------
I had not realised how polarised the decision to apply CPI or RPI was. To rub further salt in the wound, NS&I add a measly 0.01pc to the indexation. If this were increased by say 1pc it would make the change more acceptable. A challenge certainly has my support, as I have a considerably holding.
-------
I would be happy to add my name to any efforts to lobby the Government against yet another stealth tax dreamed up by Philip Hammond.
In my case I have around £200,000 of these certificates so the change will cost me around £1,600 per annum in lost interest. As usual with this government the propaganda of the logic for this change is flawed.
Is there anything you can do to beat the cut?
The certificates were so popular when NS&I last offered them in 2011 that they have not been available to new investors since. However, existing customers are allowed to renew certificates, both three and five-year, indefinitely. The only catch is that you cannot increase the value of the investment.
New certificates purchased prior to May will retain the link to RPI, meaning payouts will be protected until as far in the future as 2024.
Someone with a three-year certificate maturing before May 2019 can swap it for a five-year certificate, maturity in 2024.
sam.brodbeck@telegraph.co.uk
