Introduction to National Savings and Investments NS&I
Published / Last Updated on 16/05/2025
Most people in the UK will have heard of Premium Bonds and the monthly prize draws of up to £1m by ERNIE (Electronic Random Number Indicator Equipment) but many may not know this is offered by National Savings and Investments (NS&I).
NS&I Constitution
Is an organisation established in the UK by law i.e., created by Statute and is separate from the British Government. That said, it is backed financially by HM Treasury, so technically, the government owns it as it is the government that backs/protects and underwrites all your investments within it (as well as borrowing from it). National savings origins come from the Government of the day needing to borrow more money from the public to fund World War 1 by issuing War Bonds.
NS&I is still different to banks and building societies as it was established by law/statute, whereas the latter are separate limited companies (banks) or mutually owned by savers and borrower (building societies), constituted under the Building Societies Act.
This means that your NS&I savings are 100% protected and backed by the British Government whereas banks and building society savings are protected by the Financial Services Compensation Scheme with an £85,000 per person, per banking licence limit.
NS&I is not regulated by the Financial Conduct Authority, but savers are able to use the Financial Ombudsman Service (FOS) in the event of a dispute or complaint.
Interest Paid
You are likely to receive interest rates around 0.25% to 0.5% pa lower than those commonly available from regulated banks and building societies. This is perhaps because national savings are government backed and your protection is unlimited when compared to FSCS protected bank and building society deposits at £85,000 per individual, per banking licence.
What’s available from NS&I?
Income Tax Free Savings
- Premiums bonds – minimum investment £25, maximum £50,000. Monthly prize draws with a maximum prize of £1m. The total prize fund ‘pay out’ each year is published as tax free % amount, so your investment return should be equivalent to this over a few years but clearly there will some lucky people who win big and others who do not.
- Cash ISAs - minimum investment £1, maximum £20,000 pa.
- Junior ISAs - minimum investment £1, maximum £20,000 pa.
Taxable Savings
- British Savings Bonds – two types with a minimum investment £500, maximum £1m in each - Guaranteed Growth Bond and Guaranteed Income Bond, all are fixed terms of 1,2,3,4 or 5 years with income bonds paying taxable interest monthly.
- Direct Saver - minimum investment £1, maximum £2m. Taxable interest paid yearly.
- Income Bonds - minimum investment £500, maximum £1m. Taxable interest paid yearly.
- Postal “Investment Account” – low taxable interest rates c 1%, so not actively marketed at the current time.
Why Invest in National Savings?
- Unlimited investment protection backed by the government and not capped at £85,000 per bank licence per person.
- The ability to invest huge sums up the £millions that are fully protected.
- The chance of winning the ‘tax free’ jackpot with premium bonds.
