NATIONAL SAVINGS AND INVESTMENTS (NS&I) was to reduce its rates by up to 0.45% across several savings accounts and bonds from 1st May 2020. However, the Treasury-backed savings provider has said that to “support savers at this difficult time” reductions would not be applied to its variable interest rate products. So, Premium Bonds, Direct Saver, Income Bonds and Investment Account rates will remain as they are and holders of these accounts need not to do anything.
Reductions in rates for fixed-term products will go ahead; these include Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates.
However, savers in those investments that mature on or before 1 June 2020 and who automatically renew into a new Issue of the same term, will receive the previous, higher interest rate, NS&I said.
The original cuts were announced in February.
In the March budget, the net financing requirement for NS&I – the amount that the NS&I is targeted to raise – was cut from £10.1bn this tax year, to £6bn for the 2020-21 tax year. NS&I is strictly governed in respect of these figures by Treasury and has to balance its books. Hence, the consequence of this is likely to be that products offered will be limited to raising a smaller amount than in previous years.
With central banks cutting interest rates to counter the effects of the Coronavirus pandemic, the likelihood of savings rates delivering above inflation returns any time soon have been further reduced.
