Is inflation-proofing for you?

Pros and cons of the revamped index-linked certificates from National Savings.

Pluses

*guaranteed inflation protection

*pegged to the RPI measure of inflation not the lower CPI

*tax-free

*can cash in early, though see below

*safe haven in stormy seas

Minuses

*rate is RPI + 0.5%, down from RPI + 1% before

*5 year fixed term only, no 3 year option as before

*no interest in 1st year if cash in early, then a slightly reduced rate

*linked to RPI from next spring, by which time inflation is likely to have fallen

*stocks might not last

NS&I will be emailing 700,000 people who have registered interest in their products, many of them looking for inflation-proof investments. So there are likely to be a lot of applications.

Will they be overwhelmed again and close the issue? NS&I says it wants to keep the certificates on offer for a "sustained period".

They need to raise £14bn this year, which works out as 933,000 customers taking out the maximum investment of £15,000. But, of course, they'll be selling other investments as well.

Inflation-proof certificates are back

Savers have been desperate to find accounts which protect them from the ravages of inflation, so they'll welcome the return today of tax-free National Savings Index-linked Certificates.

The terms aren't quite as good as the previous issue, which was withdrawn last summer, causing a barrage of complaint.

The certificates are available for a five year term and pay RPI inflation (currently 5.3%) plus 0.5% as an interest rate.

Previously, you could get them for 3 or five years, and the return was RPI plus 1%.

It's extremely difficult for savers to find an an account which beats inflation and income tax combined. Virtually all of them are tax-free fixed-rate cash ISAs.

Bear in mind that the certificates don't track the monthly change in RPI. They are subject to an annual uprating.

Also, while inflation is high at the moment, it's expected to fall next year.