IL Gilts vs NS&I Certificates

[yorkshirelad1]

I decided to hang onto my certificate that is maturing this month. The rules for cashing in early are changing for certificates renewed from 23 July onwards. It will no longer be possible to cash them in early:

https://www.nsandi.com/help/manage-your ... rtificates

As far as I can see, that applies even on death. That is not good at all.

Thanks for posting about the changes due on 23 July, useful. There doesn't seem to be a great deal on nsandi.com about the changes. Usually there is some legislation-type document as may require a change to the Savings Certificates Regulations. I may do some further research.

[yorkshirelad1]

Thanks for posting about the changes due on 23 July, useful. There doesn't seem to be a great deal on nsandi.com about the changes. Usually there is some legislation-type document as may require a change to the Savings Certificates Regulations. I may do some further research.

Re the changes on 22/23 July 2023:
I've done a quick compare of the pdfs on the above url, and have found

• New issue of (2-, 3- & 5-yr) ILSCs, but rates are still 0.01%+CPI. Similar for fixed rate SCs.
• You can no longer withdraw your money mid-term (but that's not so different from a 5-year bond with an ordinary bank): I don't see anything about the death comment by GeoffF100. Usually the Director of National Savings has discretion in such circs. Many ordinary banks will not allow you to terminate a 5-year fixed term account except on death, where they will show an exception. YMMV.

there's something on the url which talks about CPI and RPI on maturity, but it's not explained clearly and is confusing and there's nothing in the pdfs (product leaflet) about this. It looks like they're trying to change the index-linking from RPI to CPI even on an existing certificate (which would seem to be a bit cheeky, changing the T&Cs mid-term).

Change to Consumer Prices Index
If you decide to renew an existing Certificate that was linked to the Retail Prices Index (RPI), we will calculate the index-linking using the Consumer Prices Index (CPI) instead. The CPI is generally lower than the RPI, so this means you will probably receive a lower return.

I can't find any formal changes to the Savings Certificates Regulations. I've e-mailed NS&I (Yeah, don't hold your breath) to ask about it. The last set of such changes was for e.g. leap year interest and other things see e.g.
https://www.legislation.gov.uk/uksi/2012/1882/pdfs/uksiem_20121882_en.pdf
and maybe these changes aren't substantial enough to warrant a memorandum.

https://www.nsandi.com/help/manage-your-savings/maturing-investments/fixed-rate-savings-certificates
https://www.nsandi.com/help/manage-your-savings/maturing-investments/index-linked-savings-certificates

[Dod101]

I decided to hang onto my certificate that is maturing this month. The rules for cashing in early are changing for certificates renewed from 23 July onwards. It will no longer be possible to cash them in early:

https://www.nsandi.com/help/manage-your ... rtificates

As far as I can see, that applies even on death. That is not good at all.

They have not mentioned what happens on death of the holder but I cannot imagine that they could not be cashed in at that time. The change though makes them marginally less attractive for the living since they will no longer be quite the 'fall back' option that they once were. For years of course they have been doing no more than maintaining their purchasing power which is valuable in itself as currently being demonstrated, even if the actual interest rate is derisory at 0.01%. I have well into six figures over a series of them maturing at different times and regard that as very valuable. As it happens I have a three year cert maturing on 24 July, a day after the new terms come into force so I expect I will get formal notification then.

My reading of the new rules is that current certs continue to benefit from RPI until maturity but I will confirm that when I get the statement about my maturing cert.

Dod

[GeoffF100]

I decided to hang onto my certificate that is maturing this month. The rules for cashing in early are changing for certificates renewed from 23 July onwards. It will no longer be possible to cash them in early:

https://www.nsandi.com/help/manage-your ... rtificates

As far as I can see, that applies even on death. That is not good at all.

They have not mentioned what happens on death of the holder but I cannot imagine that they could not be cashed in at that time. The change though makes them marginally less attractive for the living since they will no longer be quite the 'fall back' option that they once were. For years of course they have been doing no more than maintaining their purchasing power which is valuable in itself as currently being demonstrated, even if the actual interest rate is derisory at 0.01%. I have well into six figures over a series of them maturing at different times and regard that as very valuable. As it happens I have a three year cert maturing on 24 July, a day after the new terms come into force so I expect I will get formal notification then.

My reading of the new rules is that current certs continue to benefit from RPI until maturity but I will confirm that when I get the statement about my maturing cert.

Dod

The "Key features and customer agreement" for my reinvestment says the certificate becomes part of the holders estate and continues to earn index-linked growth and interest.

Renewed certificates are CPI linked. The rules for existing certificates remain the same until they mature.

[Dod101]

The "Key features and customer agreement" for my reinvestment says the certificate becomes part of the holders estate and continues to earn index-linked growth and interest.

Renewed certificates are CPI linked. The rules for existing certificates remain the same until they mature.

Thanks for that. If they do not allow certs to be cashed in on death presumably they must then allow them to be transferred in specie to a beneficiary under a Will otherwise the estate could remain open for up to five years.

This all needs a bit of careful thought because with these new conditions they have certainly become marginally less attractive. Presumably that is the idea. I have held them for upwards of 20 years and have only occasionally cashed in any. But I have always seen them as the ultimate backstop. Will probably just leave them and let them renew under the new conditions.

Dod

[yorkshirelad1]

The "Key features and customer agreement" for my reinvestment says the certificate becomes part of the holders estate and continues to earn index-linked growth and interest.

Renewed certificates are CPI linked. The rules for existing certificates remain the same until they mature.

Thanks for that. If they do not allow certs to be cashed in on death presumably they must then allow them to be transferred in specie to a beneficiary under a Will otherwise the estate could remain open for up to five years.

This all needs a bit of careful thought because with these new conditions they have certainly become marginally less attractive. Presumably that is the idea. I have held them for upwards of 20 years and have only occasionally cashed in any. But I have always seen them as the ultimate backstop. Will probably just leave them and let them renew under the new conditions.

Dod

I think we should wait and see chapter and verse from NS&I. I know when I was exor for my mother's estate (albeit 2019) where there were ILSCs in the estate, I transfered some ILSCs to the beneficiaries in specie and cashed in other ILSCs and gave cash to the beneficiaries. But T&Cs do change.

[yorkshirelad1]

As far as I can see, that applies even on death. That is not good at all.

I'd hazard a guess that death would be covered by the bit about the Director's discretion (clause 7.3)
Changes to Savings Regulations: https://www.legislation.gov.uk/uksi/2023/605/pdfs/uksiem_20230605_en_001.pdf
but I don't have that in writing and IANAL and I don't have any connection to NS&I other than as a customer