New Inflation Linked Bond From Post Office

The Post Office will tomorrow be launching a 5 year Inflation Linked Bond savings account aimed at savers who want to protect their savings from the eroding effects of inflation.

This new Inflation Linked Bond, comes soon after the announcement of inflation linked savings accounts from Yorkshire Building Society, and has been developed to meet the needs of long term savers who are concerned about the impact inflation will have on their savings.

The minimum investment in this Bond is £500 and the maximum £1 million. No additional deposits are possible and except under exceptional circumstances the account cannot be accessed until the end of the 5 year term.

It is only available for a limited period, from 22 February 2011 to 27 April 2011 but may be withdrawn earlier if over-subscribed.

The rate of return is based on the annual Retail Prices Index (rather than the Consumer Prices Index), as measured in April each year, plus 1.5% gross per year guaranteed, ensuring customers’ savings are always beating inflation rates.  In the instance that RPI was negative in any year, the return would be 1.5% per annum.

For example, the annual RPI in January 2011 was 5.1%, meaning that the rate would have been 6.6% (5.1% + 1.5%).

To find out more about the Post Office Inflation-Linked Bond or any other savings product, call 0800 169 7500 or go to www.postoffice.co.uk/savings.

MoneyHighStreet.com comment: As we commented when the Yorkshire released their inflation linked savings accounts, these accounts do seem attractive but savers do need to consider their options carefully.

Whilst inflation is currently rising, how long will this continue?

The returns available from a variable rate savings account, albeit linked to inflation, need to be weighed up against a fixed rate savings account and in doing this ensure the assessment is made considering the life of the account, in this case 5 years.