The MAM Blog – National Savings & Investments


Charles Roberston – Senior Investment Manager

From 1 May 2019, existing holders of Index-linked Savings Certificates will only be able to re-invest the maturity proceeds in Index-Linked Certificates where the return is based on the Consumer Price Index (CPI) measure of inflation, instead of the currently used Retail Price Index (RPI). The change is due to the reduced use of RPI by successive governments to measure inflation and is in line with NS&I’s requirement to balance the interests of its savers and the cost to the taxpayer.

CPI has historically yielded a lower rate of inflation than RPI (currently 0.9% lower). This can largely be attributed to the way the two indexes are calculated and the fact that RPI incorporates the housing market (which has historically been a volatile asset class); taking into account rises in mortgage payments, rents and council tax while CPI does not. Therefore, existing holders of Index-Linked certificates (they are currently not available for new purchases) which mature prior to the 1st May 2019 deadline should consider re-investing the proceeds for the maximum period of 5 years if they are able do so. The new measure of inflation will only be applied when a re-investment is made because existing holdings will continue to be based on RPI.