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Post Office extends offer period for Inflation Linked Bond

2nd September 2011 Print

The Post Office has extended the offer period for the second issue of its Inflation Linked Bond, which is now available to customers until Friday 16 September 2011.

The offer has been extended due to high demand from savers wishing to protect their savings against inflation.

The issue offers both three and five year terms, with a return of:

RPI + 1.5% gross/1.46% AER for the five year term, and
RPI + 0.5% gross/0.49%AER for the three year term 

The rate of return is based on the annual Retail Prices Index as measured in August each year, plus a guaranteed fixed return of 1.5% or 0.5% gross per year - ensuring customers' savings are beating the rate of inflation.

RPI includes the cost of mortgage interest payments and has historically run at a higher level than the CPI rate.  For example, the annual RPI in July 2011 was 5%, meaning that the annual return would have been 6.5% (5% + 1.5%) for the five year term, or 5.5% (5% + 0.5%) for the three year term.

Post Office Director of Savings and Investments Richard Norman said: "The high demand we have seen for the Inflation Linked Bond shows that inflation remains a big concern for many savers.

"With the Bank of England forecasting a continued increase in inflation for the rest of 2011, we're pleased to able to extend the offer period for the Inflation Linked Bond and offer more people the chance to take advantage of a guaranteed inflation-beating rate of return on their savings."

Applications can be made online at postoffice.co.uk.

Applicants taking advantage of the extended offer period must provide any required identification documents by the original deadline of Monday 10 October 2011- three weeks following the close of the extended offer period.

The bond can be opened with a single deposit of £500 (minimum investment £500 and maximum £1 million) with the return calculated annually and paid at maturity.  No additional deposits are permitted.  The account cannot be accessed until the end of the fixed term.