Past Issues of Index Linked Certificates
Other National Savings


Index-Linked 5 Year Certificates

(Once known as Grannybonds)

A way of linking your investment to the Retail Prices Index. On top you get a fixed interest rate which is lower if you stop early. Interest, once added, is index-linked too. This product is not currently on sale.

If you have past issues, you should check the interest rate as this can be as little 0.25% a year plus the rise in the Retail Prices Index (negative in the 12 months to April - October 2009 but plus 5.4% in the 12 months to October 2011) plus a fixed rise of from 0.05% a year to 1.35% a year depending on which issue you hold.The current rate of inflation (November 2013) is about 3.5% a year. The certificates will not fall below the value you paid initially (or if higher the value 12 months before you cash it) .

Who can invest Anyone.

How worthwhile These offer exceptional value, especially for higher rate taxpayers, who may want to always invest the maximum in every issue. So don't cash the certificates if you hold them as you cannot buy them again. .

In the long term inflation, as measured by the Retail Prices Index, may be greatly reduced but that could be a temporary phase, see this New York Times article which is equally applicable to the UK. Basic taxpayers should compare with Stock Government Index-Linked. For other types of index linked investments, see Bonds and stock. These certificates are a must for the risk averse.

Minimum £100.

Maximum £15,000 for each issue but you can also re-invest any other index linked issues of savings certificates you hold when they reach their original maturity date after 3 or 5 years. You may hold more if you inherit them. Single maximum applies to joint holdings. Certificates may also be held in trust, thus doubling the maximum investment. You need a special trustee application the first time you invest as a trustees. You may buy these in addition to other issues of National Savings Certificates.

Suitable Lump sums. Regular savings.

Money back About 4 working days if the money is paid direct to your bank account which is now the only way to receive the proceeds. For a repayment form see the National Savings web site. Any number of units may be cashed. During the first year: your original investment returned. After 1st year (and in 1st year if 're-investment certificates'): index-linking and interest added. For the current issues there are penalties if you cash in before the end of the 3 or 5 year term instead of a reduced rate of interest year by year (as in earlier issues); these are no interest and no index linking for the the 12 months before encashment. At the end of the 3 or 5 year term you will be asked whether you want to cash or re-invest ; if you do nothing your proceeds are automatically re-invested in the current issue of the same term you originally held.

Interest Variable with a minimum guaranteed rate, which for the current issue which you can re-invest existing issues into when they mature, is practically nil. The certificates never fall below what you have initially invested or the previous anniversary value (ie the value one, two, three, four or five years after you bought it). Interest on new certificates is currently virtually nil.

Interest paid When certificates cashed.

Tax All increases in the value of the certificates are tax-free. Nothing has to be declared on a tax return. The same tax exemptions apply to National Savings Fixed Interest Certificates which are less good value. Useful as a means of holding money for adult children in an absolute trust as income is tax free and doesn't need to be returned on a tax return.

Fees to pay None.

Passbook None. You get a certificate. If you don't have a holder's number card, you will be given one. This covers all issues of savings certificates. The number should be quoted if you withdraw or buy more certificates. You should have a separate holder's card for a trust holding.

Children Convenient for gifts. Certificates in the name of a child under 7 can normally be cashed by a parent or guardian.

Risk None. Full value of original investment returned on withdrawal.

How to investOn-line. By phone. By post.

Where from Get an ordinary application form or a special trustee form online from National Savings once the certificates are on sale again. No longer available at Post Offices.

Last updated 12 November 2013.