BizAims

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 (i.e., 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.

 However, its entire back office operation is contracted out to a German company, Siemens Business Services . Some work is outsourced to Chennai, India .It offers many of its services through post offices, and was founded in 1861 as a postal savings system.

NS&I attracts savers through offering saving products with tax free elements on some products, and a 100% guarantee from HM Treasury over any deposits. However, its rates are often low, e.g. its cash ISA (which is tax-free with any institution) is at a mere 3.90% AER as of 1st November 2008 .

NS&I's most popular product, Premium Bonds, celebrated its 50th anniversary in November 2006 when a special 5 x £1m jackpot draw was announced. A second 5 x £1m jackpot anniversary draw in June 2007 celebrated 50 years since the very first prize draw.

Role

National Savings and Investments was founded by the British government in 1861 as the Post Office Savings Bank, the world's first postal savings system. The aim of the bank was to allow workers "to provide for themselves against adversity and ill-health", 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 £83 billion in savings, 9% of the UK savings market. This accounts for 16% of the UK's national debt. 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.

Products

 · NS&I offers a wide range of savings and investment products, specialising in tax-free and income generating products. Besides the very popular Premium Bond, NS&I's range of products includes:

 · Individual Savings Accounts (ISAs)

 · Inflation Index-Linked Savings Certificates

 · Fixed Interest Savings Certificates

 · Income Bond

 · Guaranteed Equity Bonds

All savings and investment products are 100% backed by HM Treasury.

National Savings and Investments (NS&I) has followed up this month’s 0.5% cut in the base rate by reducing rates on its variable savings accounts by up to 0.75%.

Meanwhile, new customers opting for its Government-backed fixed-rate offerings will lose out by up to 1.35%.

According to a spokesman, rates on fixed products are down as a consequence of falls in gilt yields.

The cuts come two weeks after rates on NS&I variable accounts fell by up to 1% and returns on income bonds by up to 0.5%.

However, the Premium Bonds prize fund rate will remain unchanged in the short term.

The size of the fund is determined by the base rate and aggressive cuts have reduced the chance of a win for a person investing £1,000 from 43% at the beginning of 2008, to 28% today.

According to a BBC report, in the past year the total number of prize winners overall has fallen from 1.7 million to just over one million.