Middle Britain flocks to 'safe house' NS&I
The Northern Rock crisis was one more boost for Treasury-backed products, writes Julian Knight, although security can come at a price
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.National Savings & Investments (NS&I), the Treasury-backed savings body, is riding a wave of renewed investor interest and has seen a surge in deposits since the Northern Rock crisis broke last month.
Jonathan Akerman of NS&I says the Treasury's backing is its "unique selling point": "Whenever there is a perceived risk, people come to us."
Independent financial advisers (IFAs) point out that NS&I's resurgence goes back further than the Northern Rock bail-out.
"National Savings has definitely upped its game," says Susan Hannums, savings manager at IFA AWD Chase de Vere. In particular, Ms Hannums likes the look of the National Savings tax-free products – its Direct individual savings account (ISA) and index-linked certificates. "The ISA is a fantastic account. It pays 6.3 per cent and is very simple with no hidden nasties," she says.
The index-linked certificates also offer attractive returns. "The five-year certificate pays 1.35 per cent above the retail price index," says Ms Hannums. "At present, this adds up to a tax-free return of 5.45 per cent. For higher-rate taxpayers, in particular, this is good."
But the big thing for many investors with NS&I, whose offerings also include premium bonds, seems to be its ultra-safe reputation. In addition, NS&I products can be purchased easily and conveniently at the post office, by phone or online.
However, there is a price to be paid for security and convenience, says David Kuo, head of personal finance at advice website Motley Fool: "Some of National Savings' offerings have improved but many still lag behind what the high street has to offer." He cites NS&I's easy access account, which pays 2.6 per cent on balances of between £100 and £1,000. "This is substantially below the best on the market, which is an Anglo-Irish bank account paying 6.1 per cent."
Nevertheless, NS&I is pulling in the crowds. "Twenty years ago National Savings was there for elderly risk-averse savers and children," says Jonathan Fry of IFA Jonathan Fry & Co. "What's happened is that thrifty, middle-class, middle-Britain people now view NS&I as a viable option."
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments