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Legal & General Inflation Protected Deposit Bond

14th November 2011 Print

Legal & General has launched a new, innovative savings plan, which is designed to offer investors the potential to protect their capital from inflation whatever the level of the RPI over a 5 year term.

The new fixed term structured deposit bond, Inflation Protected Deposit Bond 1, offers investors a minimum return of 17.5% at maturity (3.278% AER) or, if greater 100% of RPI growth on their original investment. The new plan is available for investment for eight weeks from Monday 14 November to Friday 6 January 2012. This is a limited offer and Legal & General reserves the right to close the plan early without notice.

Legal & General's Head of Business Development, James Harrington said, "The rate of inflation, as measured by RPI, rose to 5.6% in September, which is its highest point since June 1991 (5.8%).  If the RPI (or for that matter the CPI) stays at this level, or goes higher, savers are facing a real inflation risk to their capital. Their hard earned savings will be quickly eroded over a short time by the combined evils of high inflation and low saving rates. In fact current levels of inflation (around 5% per year) could erode as much as a fifth of the value of money held in a typical deposit account over a five year period. That means the purchasing power of savings would reduce to 80% of today's value.

Savers who invest in our inflation protected deposit bond will be assured to know that they receive 3 way protection from inflation risk. First their original capital will not be eroded by continued high inflation because their savings are linked to the RPI.  Second, if the rate of inflation falls, they will receive a fixed minimum return of 17.5% at the end of the five year term, which offers investors the potential to beat inflation. And third, savers also have the peace of mind of knowing that the deposit bond aims to return their initial capital at maturity.

We think this offer will prove extremely attractive to cautious investors who are concerned that the current high levels of inflation may, if not checked, have a significant impact on the real value of their savings over time."

The end of the five year fixed term is 25 January 2017. If investors take out some or all of their money before the end of the fixed term they may get back substantially less than they originally invested.

The minimum investment is £500 and the Bond is available as a deposit plan (for individuals, pension trustees, charities and corporate applications), new cash ISA applications (up to a maximum of £5,340) and for cash ISA transfers for which there is no maximum. The last date for ISA transfers is 23 December 2011 to allow time for completion of the transfer before the offer close date. The closing date for all other applications is 6 January 2012.

For more information, visit