Savers rush for new index-linked certificates

Inflation-beating savings certificates went back on sale yesterday as the Government-owned NS&I relaunched its popular fixed-term tax-free scheme. Index-linked savings certificates were withdrawn from sale last July after being heavily subscribed by people desperately seeking decent savings rates.

The new five-year certificates pay RPI plus 0.5 per cent which, at the latest RPI figure, would give tax-free returns of 5.8 per cent. That is a considerably better return than the otherwise best-buy five-year bond from BM Savings, which pays 5.05 per cent, or 4.04 per cent after basic rate tax is deducted. The demand for the NS&I certificates was such that some 700,000 people had registered to be informed when they would return to sale.

The interest rate on the new certificates is less attractive than previous issues, which paid 1 per cent above RPI, but high street interest rates are so paltry sales are expected to be brisk. However, with the maximum allowed in a certificate being just £15,000, NS&I said it is likely to be months rather than weeks before the new issue runs out.

Jane Platt, the chief executive of NS&I, said: "Our aim is to keep savings certificates on sale for a sustained period of time and to enable as many savers as possible who wish to invest to do so." The government department has calculated it needs to rake in £14bn this financial year to meet the Treasury's 2011-12 £2bn net financing target.

In a further change to previous issues – presumably to dampen demand – the certificates will not be available at Post Offices: they can only be bought online or over the phone.