Friday 9 August 2013

NS&I to hit pensioners on Armistice Day

"Tens of thousands [of] customers with old National Savings & Investment savings accounts will see returns cut in November, it emerged today.
"The changes affect savers who took out an NS&I Savings Certificate before 1996.

"Roughly £745m is held across 967,000 of these accounts, according to NS&I. The government's savings arm told The Telegraph that the return on 89,057 accounts, typically held by older savers, will fall from November 11, 2013."

The Telegraph also says:

"NS&I was created in 1961 as the Post Office Savings Bank to encourage saving and attract deposits for the Treasury to use running the country. These two tenets remain today. The simplest way to raise money is to offer alluring rates to savers. However, NS&I is bound by rules that force it to balance the interests of three parties: the Government, savers, and the banking industry.

"A flood of money going into NS&I coffers has upset this balance and the Government has ordered NS&I to stop taking so much money. As a result it has cut rates and accounts to dissuade savers. The latest version of NS&I Savings Certificates is no longer on sale."

Yet again, the Treasury shows that it has forgotten its own history, or feigns to have done so. As I have shown here and to my MP, both the Government and the Opposition expressly recognised a social obligation to pensioners to protect them from inflation, when Index-Linked Savings Certificates were first introduced in 1975. This was made clear in exchanges in both the Commons and the Lords (please see the link just given, for details).

I don't know whether the choice of Armistice Day for these new changes to take effect, is a deliberate insult to the elderly, some of whom may still recall the last World War, or simply another example of the crass, oblivious obtuseness that I am coming to expect from the finely-honed minds of the Treasury.

At least there is the option for existing holders to switch to new index-linked certificates - but the rest of us are excluded from making fresh purchases. And this still leaves open the question of how RPI may be manipulated in future to minimise returns to savers.

I read some general trends here: the Government is quietly abandoning its duty to keep inflation down, its grip on the public finances is slipping, and the public (rushing to NS&I for safety) can see that the Emperor has no clothes.

One commentator on the Telegraph article (1066goldberg) says buy physical silver; another (oldkingkole) says he doesn't understand the logic; I think I do.

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