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National Savings - Investments

National Savings and Investments offer a range of investments that are backed by the UK Government and Treasury.

Historically, the original government-backed investment schemes were introduced to finance the wars with France in the 17th and 18th centuries. The success of this method for raising national capital, while providing investors with a relatively secure investment, has meant that National Savings and Investments, albeit in their current format, are with us today. The modern day National Savings and Investments began life as the Post Office Savings Bank in1861.

National Savings and Investments deposits are guaranteed by the UK Treasury.

The most commonly used national savings investments are:

National Savings Premium Bonds

Premium Bonds were introduced in 1957. They are the most popular of the National Savings and Investments methods.
Premium bonds differ from traditional investments in a peculiar way. While the government pays interest on the total value of premium bonds, this interest is paid into a prize fund, rather than directly to the investors. Each month, a prize draw is held, and the winners are paid prizes directly from the prize fund. Prizes are free from Income Tax and Capital Gains Tax.

The top Premium Bonds prizes are two £1million prizes, which are awarded each month. There is currently a total approximate prize fund of £102 million pounds each month. 23 million UK residents own at least £100 value of Premium Bonds.

Fixed Interest Savings Certificates.

Fixed Interest Savings Certificates are an investment of a lump sum that will earn a guaranteed rate of interest over the term. Like Premium Bonds, income from Fixed Interest Savings Certificates is free from Income Tax and Capital Gains.

Normally, you would invest in a Fixed Interest Savings Certificate for two or five years.

Index-linked Certificates.

Index linked savings are investments that are guaranteed to outperform inflation over the period on the investment. The benefit of the Index-Linked Savings Certificate is that if there is even a significant rise in inflation, there is an equivalent rise in the return on these investments. Conversely, if inflation falls, Index-Linked Savings Certificates are generally outperformed by Fixed Interest Savings Certificates. However, only index-linked products such as this can ensure you will certainly get a rise in the real value of your investment.

Normally, you would invest in an Index Linked Savings Certificate for three or five years.

NS and I Income Bonds.

Income Bond investments are designed to provide an income for you in return for investing a lump sum.

Income Bonds differ from traditional savings in that the interest is paid as an income, rather than as a growth in the investment value. This is useful for people who have a lump sum to invest and would like to top-up their normal income.

You can withdraw your investment at any time, now without notice or penalty. Consequently, there is no fixed investment term.
The income on Income Bonds is subject to UK tax.

Pensioners Guaranteed Income Bonds.

Available to anyone over the age of 60 and will provide a guarantee income in return for a lump sum.

Pensioners Guaranteed Income Bonds are specifically designed to provide the over-60's with a high-interest Income Bond to top up their income from traditional pensions. They differ in some ways to Income Bonds. For example, the interest rate is guaranteed when the bond is purchased, and the bond is taken for a fixed period of time.

The income on Pensioners Guaranteed Income Bonds is subject to UK tax.

Fixed Rate Bonds.

Investment that provides a fixed rate return over the period of the investment. Fixed Rate Savings Bonds allow you to choose to take the interest due in either income or growth. Currently, there is a choice of three bond terms, 1, 3 or 5 years. The interest rate is guaranteed for the term of the investment.

The growth and income on Fixed Rate Savings Bonds is subject to UK tax.

NS and I Capital Bonds.

Five year investment product designed to give a guaranteed return of capital after the five years plus interest.

Capital Bonds offer only fixed-term investments. However, growth is guaranteed at a rate of interest that grows throughout the term of the investment.

The growth on Capital Bonds is subject to UK tax.

For a full range and explanation of all the National savings products available please see the NSandI website.