Reintroduction of Index Linked Savings Certificates pegged for next tax year.

Interest on future NS&I Index Linked Savings Certificates will be based on RPI.

National Savings & Investments (NS&I) are to relaunch their Index Linked Savings Certificates it has been announced.

As inflation rose steadily last year the Index Linked Certificates were withdrawn due to increasing demand. They were popular with savers as they provided a return guaranteed to be above the Retail Price Index (RPI) and the interest paid was tax free.

Since their withdrawal in July 2010 only holders of existing certificates could take out new ones when their existing products matured.

NS&I have indicated that they plan to reintroduce the certificates at some point in the 2011/12 tax year. In a somewhat surprising move it was also confirmed that interest would still be pegged to RPI, which is excellent news for savers as RPI tends to be higher than CPI (Consumer Prices Index).

The news will be welcomed by savers; the withdrawal of the Index Linked Certificates in July 2010 left a hole which has, to a great extent, not been filled by banks and building societies.