In this brief guide we are going to discuss the NS&I, and the products it offers.
Who are NS&I?
The NS&I(National Savings and Investments) is a UK state-owned bank which provides financial products in the United Kingdom. The NS&I was formerly known as the Post office savings and investment bank. The NS&I Is not a bank.
The NS&I bank is an executive agency which is under the chancellor of the Exchequer but is also a non-ministerial government department.
The NS&I has mainly tried to attract savings from UK savers and so it directly competes with the private market for saving funds. The NS&I will then use this saving funds to fund government projects. This is especially the case when the UK government has a tax deficit.
The NS&I can compete with the private market as it has a 100% guarantee on all saving deposits from HM treasury and it can offer tax-free gains on some of it’s saving products.
The NS&I was founded in 1861 by the Palmerston government and was originally called the Post Office Savings bank.
It essentially created the world’s first savings system and this would have allowed ordinary people who may not have had a bank account to still be able to access saving accounts and benefit from them as most people were. When the NS&I bank was formed it stated that its aim was to allow ordinary workers a facility “to provide for themselves against adversity and ill-health”. It also, of course, provided funding for the government at times of huge tax deficits.
During world war 1 and world war 2 the NS&I bank incentivised savings by issuing saving certificates.
The NS&I later transferred from the Post office the HM treasury in 1969 and thereafter changed its name to the National Savings bank. It then became an independent legal entity under the National Savings Bank Act 1971. It had its final name change in 2002 to the National Savings and Investments (NS&I).
NS&I currently has over £140 billion in savings under its management and as mentioned previously this has been a cheap way for the government to fund its public expenditure. Interest rates are set to attract savers from the private market but still to remain competitive enough for the government to borrow from.
As you can imagine, the NS&I could become more competitive than the private market so there are rules in place to ensure it does not become a market leader and disrupt the businesses of the private market.
The NS&I offered most of its products through the post office but since November 2011 it has mainly offered its products via post, the internet and through the telephone.
Is NS&I safe?
Yes the NS&I is safe as all of the funds deposited with it are 100% backed by HM Treasury, which means any money you save with NS&I is 100% safe.
What is NS&I number?
Your NS&I number is a number which is allocated to you when you register with NS&I. You will need your NS&I number to log into the platform or when you call the National Savings and Investments bank. You can find your NS&I letter on any letters you may have been sent. The NS&I number is eleven digits long and will either start with an 11, 21, 31 or 41.
How much can I invest in NS&I bonds?
You can invest a minimum of £500 in NS&I bonds and a maximum of £1m. The NS&I bonds will pay you a monthly income and can be cashed out whenever you want without you been required to provide any notice or incurring any withdrawal penalty. You must be aged above 16 years of age to invest in the NS&I bond.
Which NS&I products are tax free?
Some NS&I products pay returns that are free from income and capital gains tax. The Junior ISA is a tax free product currently being offered. The direct ISA is also a tax free product. You can save up to £20,000 without paying a penny in tax on the interest
Below are the current products the NS&1 currently offer. You can find more about these products here.
The rates on the premium bonds are currently 1.40%. The rates are used to calculate the prize fund and you can win from £25 to £1m each month in the prize draw.
The prizes are tax-free and the odds of each £1 winning a price are 24,500 to 1 each month.
The rates and the odds are variable and this means they can change at any moment.
The rates on the Junior ISA are 3.25% and this is a variable rate. The Junior ISA is a tax-free product. With the Junior ISA you can open a tax free account for your child r transfer an existing Junior ISA from a different Junior ISA provider or trust fund.
The rates on the Income bonds are either 1.15%b or 1.16% and these are gross variable rates. This means the rates can change at any time. With the income bonds, you are paid your returns monthly.
The direct ISA has a rate of 0.90%. It is a variable rate and this means it can change at anytime. The direct ISA is also a tax-free product. You can save up to £20,000 without paying a penny in tax on the interest
The direct saver has a rate of 1.00% and this is a gross rate.
You can open your direct saver account with as little as £1 and manage your account online or by phone.
The Investment account has a rate of 0.80%. This is a variable rate which means it can change at any time.
You can save via post and you have relatively easy access to your money.
Products no longer offered by the NS&I
Below are the products no longer offered by the NS&I
Fixed-Rate Savings Bonds
FIRST Option Bonds
National Savings Stamps and Gift Tokens
Easy Access Savings Account
Children’s Bonus Bonds
Pensioners’ Bonds and Capital Bonds
Ordinary Account/Treasurer’s Account/SAYE/Yearly Plan/Deposit Bonds
Frequently asked questions about the NS&I
Below are some of the most frequently asked questions about the National savings and investments.
Can I open a joint NS&I account?
Yes, you may be able to open a joint NS&I account for Guaranteed Income Bonds, Guaranteed Growth Bonds, Income Bonds, Direct Savers and Investment Accounts. Usually, these accounts can only be opened with one other person as a joint account holder.
In this case, the maximum deposit you can make into the account will count for each person and effectively double. Your money will still be guaranteed in full by HM treasury.
Some accounts cant be opened jointly, these include Premium bonds, Junior ISAs and Direct Isas.
How do I track old NS&I investments?
If you have old NS&I investments then you can track them using the NS&I tracing service.
If you have lost the details for the investments or you are looking for investments which someone who is now deceased may have held. To use the NS&I tracing service you will simply need to fill in the tracing service request form with as much detail as you can provide and the tracing team will begin the trace.
What happens to your NS&I accounts when you die?
If you die then your executor who is managing the distribution of your estate will then have to complete a NS&I death claims form.
Your executor will also have access to guidance on how to claim the deceased assets from NS&I. If you need further assistance you will also be able to call and get any help.
You will also have guidance on what to do if the person who has died did not leave a will. You will be informed on the potential inheritance tax liability but you should seek further financial advice.
Can I invest with NS&I if I don’t live in the UK?
In most cases, yes you can still hold an NS&I account if you’re not in the UK – but there are some restrictions.
“Premium bonds: You are able to hold premium bonds outside the UK, but not all countries will permit it. For instance, US gambling and lottery laws mean you may not be able to hold premium bonds there.
Investment Guaranteed Growth Bonds: You’ll need to hold a UK bank or building society account to receive BACS transfers.
Direct Saver: You’ll need to hold a UK bank or building society account to receive BACS transfers.
Direct Isa: You won’t be able to make any further deposits unless you are a UK resident.
Junior Isa: Children usually have to be UK residents, but there are exceptions if the child is a UK Crown servant, is a dependent of a UK Crown servant, or is married to or in a civil partnership with a UK Crown servant.
Income Bonds: You’ll need to hold a UK bank or building society account to receive BACS transfers. Guaranteed Growth Bonds: You’ll need to hold a UK bank or building society account to receive BACS transfers.
Guaranteed Income Bonds: You’ll need to hold a UK bank or building society account to receive BACS transfers.
Index-linked Savings Certificates/Fixed Interest Savings Certificates: You’ll need to hold a UK bank or building society account to receive BACS transfers.”
Can NS&I cut savings rates?
Yes, through the framework set for the NS&I, it shouldn’t be so competitive where it marginalises the retail market by having market-leading products. If this becomes the case then the NS&I can cut rates. Rates can also be increased if the NS&I want to attract savings.
In the guide above we discussed the NS&I. If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.