Inflation Beating Savings Plans

Oliver Roylance-Smith, Head of Investment and Savings

"Even though National Savings & Investments (NS&I) has withdrawn its index-linked savings plan, you can still find a home for your savings with the potential to beat or track retail price inflation (RPI). In the table below you will find several plans aiming to achieve this. These plans have full capital protection from UK banks.

Oliver Roylance-Smith head of savings and investments
Inflation Beating Plans
ProviderPlanDeposit TakerPotential ReturnTermMore Info
Retirement Deposit PlanInvestec Bank plc

3.75%

per year, plus 22.5% at end of term

6 yearsMore Info >
  • 3.75% annual payments from capital
  • 77.5% remainder of initial deposit paid at end of term
  • Potential 22.5% growth return at end of term, if the Index is higher than 90% of Initial Value
  • Capital protected
  • Low minimum - £3,000
  • Short/medium alternative to fixed rates
  • Available for Cash ISA and  ISA Transfers 
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Only available for new ISA investments or ISA transfers, not direct investments
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
6 Year Defensive Deposit PlanInvestec Bank plc

24%

at end of term

6 yearsMore Info >
  • 24% fixed return if the Index is higher than 95% of its Initial Level
  • Capital protected
  • Low minimum - £3,000
  • Medium/longer term alternative to fixed rates
  • Available for Cash ISA,  ISA Transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
4 Year Deposit PlanInvestec Bank plc

12%

at end of term

4 yearsMore Info >
  • 12% fixed return if the Index is higher
  • Capital protected
  • Low minimum - £3,000
  • Short/medium alternative to fixed rates
  • Available for Cash ISA, ISA Transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
Kick Out Deposit PlanInvestec Bank plc

3%

per annum

Up to
6 years
More Info >
  • 3% for each year if the FTSE 100 finishes higher than its starting value
  • Opportunity to mature early at year 3, 4 or 5
  • Capital protected
  • Short/medium term alternative to fixed rates
  • Available for Cash ISAs, ISA transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital 

These are structured deposit plans and are capital protected. There is a risk that the company backing the plans or any company associated with the plans may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) , depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plans are not held for the full term.

If you are at all unsure of the suitability of these types of investments, both in respect of their objectives and risk profiles, you should seek independent financial advice.

Cash ISA Selection
ProviderPlan NameDeposit TakerISA OptionTermMaximum Potential ReturnMore Info
Kick Out Deposit PlanInvestec Bank plcyesUp to
6 years

3%

per annum

More Info >
Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 3% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer.
Important Information: Structured deposits offer you the potential to earn higher returns than you would with a regular savings account. Your returns are based on the performance of an index or commodity. If the investment does not perform well you may receive no income or capital growth, but you can be confident that your capital will be repaid. You have no access to your deposit during the term of the account, typically 3 to 6 years but your original capital will be repaid in full at the end of the term. In the event that the deposit taker is unable to repay your initial investment and any returns stated you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) depending on your individual circumstances.

Compare and find our best savings plans

Savers worried about the effects of inflation on their savings should shop around to ensure they are getting the best returns they can on their cash. With retail price inflation measured at 5.6% in September 2011 (Source: Office of National Statistics) means conventional instant access and fixed rate bonds currently on offer at the time of writing are struggling to ensure that your money maintains its value in real terms. 


The above inflation beating plans provide alternative solutions to conventional fixed rate bonds and are worth considering. 
 

How does inflation impact savings?

 

The economic definition of inflation is the sustained rise of the price of goods and services over a period of time. A good way to think about the impact of inflation on the buying power of your money is in terms of a “shopping basket” of goods and services that you typically buy in a given month. While the impact of inflation may be difficult to see month on month over a period of years the erosionary effect on the buying power of your pound can be clear to see. For example the average cost of a loaf of sliced white bread (800g) in 1999 was 51p and in 2009 this cost had risen to £1.26, a rise of 147% (Source: Office of National Statistics).