National Savings and Investments Terms and Conditions change

It hasn't been mentioned here yet, but National Savings and Investments announced changes in terms and conditions to be introduced from 20th September. This affects a number of products, but the one that most worries me is Index Linked Savings Certificates -- see for details.
In the past it has been possible to cash them in after one year with no loss of interest or indexation. In the future, that is for certificates purchased after 20th September (if they are on sale) or for certificates that roll over after that date there will be a penalty of 90 days interest and loss of index-linking for the _whole_ certificate for that year.
This will hit partial redemptions badly -- e.g. redeeming 100 pounds of a 15,000 pound certificate. A partial work-around would be not to purchase a 15,000 pound certificate in future, but instead to purchase 15 individual certificates of 1,000 pounds, or even 150 certificates of 100 pounds (the minimum investment per certificate). This would not mitigate against the 90 day penalty, but at least it will avoid the loss of index-linking for the amount that remains invested.
We don't know how NS&I will react to a request to purchase 150 certificates of 100 pounds -- there are no certificates on sale at the moment. I assume they have considered this and will not have to issue 150 individual paper certificates.
MJA
Reply to
MJA
Interesting idea. And at least (which didn't get picked up by any of the newspaper report that I read about the changes) NS&I are offering online admin. saving paper (don't know how it will work, but the online admin of Premium bonds is pretty OK).
Reply to
Allan
Can't really see much in the way of a difference: they're bringing savings certificates in line with their other products.
IMHO, if one buys a product that says 5-year term, it does what it says on the tin: people who got out early have been lucky up to now. It seems to me that NS&I are acting like other savings institutions i.e. interest penalty for early redemption. At least NS&I have the grace to let us know in advance (not during the life of the certificate) and there's a 30-day transition period.
Sounds pretty good to me.
Frankly, the media seem to like to bash NS&I. Fine with me. I like the products. If the media bash NS&I, that means people will defect in their droves (not) and leave more for me. Or maybe that's what those journos want so they can fill their own boots...
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Reply to
Allan
It's ok until you try to withdraw your Bonds.
You have to answer a number of security questions even though you've managed to log in correctly and then they insist upon telephoning you (automated call granted but a pain nevertheless).
Online sort of means online I thought.
Oddly enough, when you're depositing money (buying Bonds) they don't insist upon any sort of "security" checks at all.
Reply to
Tim Richards
1 application for a single certificate per person per working day. If they then close the offer once the target amount is reached you may be unlucky in investing more than a small amount in total.
Reply to
alan
let us know in advance (not during the life of the certificate) and there's a 30-day transition period.
It's also pretty good that they will let you extend the IL certificates beyond the maturity date even when they are not issuing any IL certificates at the time.
Robert
Reply to
RobertL

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