National Savings and Investments
From Wikipedia, the free encyclopedia
National Savings and Investments (NS&I), formerly called the National Savings Bank, is a state-owned savings bank in the United Kingdom. It is an executive agency of HM Treasury. The aim of NS&I is to attract funds from individual savers in the UK for the purposes of funding the government’s public sector borrowing requirement (ie the funds in excess of taxation that the government requires to fund its activities). NS&I's head office is in Kensington, London, with operational sites in Blackpool, Glasgow and Durham. NS&I attracts savers through offering saving products with tax free elements, and a 100% guarantee from HM Treasury over any deposits.
NS&I's most popular product - Premium Bonds - celebrated its 50th Anniverary in November 2006 when a special 5 x £1m jackpot draw was announced. A second 5 x £1m jackpot anniversary draw in June 2007 will celebrate 50 years since the very first prize draw.
[edit] Role
National Savings and Investments was founded in 1861 as the Post Office Savings Bank. The aim of the bank was to allow workers to save, and to provide the government with access to debt funding. The bank's name later changed to National Savings Bank, and later to National Savings and Investments.
NS&I manages around £72 billion in savings, 10% of the UK savings market. This accounts for 17% of the UK's national debt [1]. As funds from NS&I are a relatively cheap source of government borrowing, the bank sets interest rates both to attract savers and provide low cost finance for the government.
Many investors see Premium Bonds as a safe alternative to the National Lottery because they are only gambling with the interest - not with their capital (minimum investment is £100, the prizes range from £50 up to £1m).
[edit] Products
NS&I offers a wide range of savings and investment products, specialising in tax-free and income generating products. The most popular is the Premium Bond. This is a bond of value £1 which is purchased by a holder and retained for an unlimited period of time. The holder receives no interest, but instead, each bond is entered into a prize draw announced each month. There are two top prizes of £1 million, with several tranches of smaller prizes from £100,000 to £50. At the time of writing (Nov 2006) over 1 million prizes per month are awarded. The prize draw pays out approximately 2-3% of the total value of the fund each year. A computer known as ERNIE (Electronic Random Number Indicator Equipment) selects the winning Bonds. Approximately 23 million people in the UK hold Premium Bonds, around 40% of the population, worth £35 billion. Premium Bonds can be redeemed for face value at any time, a minimum holding of £100 and maximum holding of £30,000 is in place. All prizes are tax free.
Other products include tax-free saving certificates, tax-free savings accounts (ISAs), fixed rate/fixed term bonds, and income replacement bonds.
A unique selling point of NS&I products is a 100% guarantee by the Treasury for any deposits, savings or investments placed with NS&I.
[edit] External links
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