September 9, 2011 5:45 pm

Savers short on time to beat inflation

Savers seeking to protect their cash from rising prices have just days to open an inflation-linked account with a bank or building society, following the withdrawal of National Savings and Investments (NS&I) index-linked certificates this week.

NS&I said it had stopped selling the certificates after attracting half a million investors since they were reissued in May. The government-backed provider is not expecting to issue any more until the next financial year.

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According to savings analysts, that leaves only seven accounts on the market with a link to inflation, and many of these have closing dates in September.

Cambridge Building Society has said it will accept applications for its Inflation Linked Bond until Thursday.

This five-year product will pay an annual return equal to any rise in the retail prices index (RPI) plus a guaranteed 1 percentage point, with the pay-out received on maturity.

Andy Lucas, head of the society’s direct arm, said he had seen a “surge in customer interest” since the withdrawal of NS&I’s certificates.

Similarly, Yorkshire Building Society will only offer its six-year Protected Capital Account – which pays the greater of the rise in the RPI index or 0.25 per cent each year – until September 16.

Although this is a structured deposit provided by Credit Suisse, rather than a conventional savings bond, it can be held in a cash individual savings account (Isa) to produce tax-free inflation-linked returns.

Two further RPI-linked accounts offered by the Post Office, but run by Bank of Ireland, have had their closing dates extended to September 16.

A five-year bond will pay RPI plus 1.5 percentage points, while a three-year version pays RPI plus 0.5 percentage points.

Investors willing to take more risks have more time to secure an return, as the latest index-linked corporate bond, to be issued by National Grid, will open for investment later in the month.

Both the bond’s capital value and income payments will be linked to RPI.

It will be tradeable in tranches of £100 on the London Stock Exchange.

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