Savers plough £4.4bn into NS&I, but green bonds fizzle

Laura Suter
30 June 2022

•    £4.4bn of savers’ money went into NS&I in 2021-22
•    Premium Bonds are the most popular accounts, with £10.3bn of net inflows
•    Guaranteed Bonds and Income Bonds both saw outflows of £3.9bn each
•    Green Savings Bonds only attracted £289m of money

Laura Suter, head of personal finance at AJ Bell, comments on the latest NS&I savings figures:

“Premium Bonds remain the jewel in NS&I’s crown, attracting more than £10bn of savers’ money in the past tax year. In total savers put £24.7bn into the accounts, in the hope of winning big in the monthly prize draw. However, the cost of living crunch and improving interest rates elsewhere meant that savers also withdrew more than £15.5bn from Premium Bonds in the same year. 

“The Green Savings Bond has been a flop, with the paltry rate on offer at launch seriously hampering its appeal among investors. At launch the three-year fixed-rate bond paid 0.65%, below the rate of an easy-access account at the time, and that has clearly deterred savers. There were rumours before the launch that Chancellor Rishi Sunak wanted to raise £15bn from the green savings bonds, so the £288m raised is likely to lead to a review of what went wrong. As a comparison, in the same period retail investors pumped £15.7bn into ESG funds*.

“The rate on the Green Bonds was doubled in February, to 1.3%, presumably in a last-minute attempt to boost uptake before the tax-year-end. Those that have handed their money over to help fund Government green projects might also be slightly dismayed to learn that the Government has two years in which to invest the funds, meaning that for two-thirds of the bond’s term the money could be sitting in an account doing no good.

“Withdrawals were the name of the game for NS&I in the past year, with eight of its 13 account types seeing net withdrawals. Cuts to interest rates, closures of some accounts and people raiding their savings in the cost of living crisis lead to these significant withdrawals. Guaranteed bonds, which are closed to new customers, saw £3.9bn of withdrawals in 2021-22. In the same period Income Bonds, which saw their interest rates slashed, had £3.9bn of outflows. 

“NS&I is continuing its shift online, aiming to make 85% of customer transactions online in the next year. Now just three of its seven available account types can be opened and managed by post, meaning that older people, those who aren’t digitally savvy or those who aren’t online risk being blocked from using the Government’s savings service.”

*Based on Investment Association data.

Laura Suter
Head of Personal Finance

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.

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