National Savings & Investments (NS&I) has admitted that they are unlikely to reintroduce the ever popular Index Linked Certificates to new savers this year.

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The Index Linked Certificates have been perennial favourites with UK savers as they produce a tax-free return linked to inflation.

The guaranteed return above RPI (Retail Prices Index) means holders of the certificates can always be assured of a ‘real return’, with interest tax-free for all savers, and the ability to access savings at anytime.

NS&I has also become popular with savers since the credit crunch following issues at banks such as Northern Rock, Halifax and RBS, because 100% of a savers capital is protected by the Treasury, irrespective of the amount deposited.

NS&I Index Linked Certificates

However, because of the way NS&I operate the Index Linked Certificates were withdrawn for new savers in the summer of 2012 and it now looks unlikely that they will return during 2013.

Whilst they compete with banks and building societies NS&I are run very differently. The government gives NS&I a Net Funding Target each year, stating how much can be raised from savers. The Net Funding Target for 2012/13 was released a few days ago and was set at zero, meaning that NS&I have no scope to attract new funds, crushing the hopes of savers that the Index Linked Certificates would return.

Gill Stephens from NS&I said: “Over the Spending Review period (April 2011 to March 2015) our objective is to broadly balance inflows and outflows, subject to agreement with HM Treasury on each individual year’s target.”

Stephens went on to say that she “(does) not anticipate reintroducing Index linked Savings Certificates during this financial year.”

Existing customers

Although new savers will not be able to take out Index Linked Certificates existing savers, whose certificates mature, will be able to roll over their investments into new issues, therefore maintaining a real and tax-free return.