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Post Office launches inflation-linked bond

Monday 21st February 2011
The Post Office has expanded its savings range with the launch of a new five-year Inflation Linked Bond offering savers the opportunity of a market-leading return.

The Bond is available for a limited period only from Tuesday 22 February.

The Post Office Inflation Linked Bond is perfect for savers wishing to protect their savings from the eroding effects of inflation.

The rate of return is based on the annual Retail Prices Index (rather than the Consumer Prices Index), as measured in April each year, plus 1.5% gross per year guaranteed, ensuring customers' savings are always beating inflation rates.

In the instance that RPI was negative in any year, the return would be 1.5% per annum.

For example, the annual RPI in January 2011 was 5.1%, meaning that the rate would have been 6.6% (5.1% + 1.5%).

The bond is available to customers for a limited period only - from 22 February 2011 to 27 April 2011 - and may be withdrawn earlier if over-subscribed.

The bond can be opened with a single deposit of £500 (minimum investment £500 and maximum £1million) with the return calculated annually and paid at maturity.

No additional deposits are permitted. The account cannot be accessed until the five-year term has ended.

Post Office Director of Savings and Investments Richard Norman said: "The vast majority of savings accounts on the market do not offer interest rates which beat current levels of inflation. The Inflation Linked Bond has been developed to meet the needs of long-term savers who are concerned about the impact of rising inflation on their savings.

"This market-leading product marks a further step in increasing our financial services proposition and giving people a serious alternative to high street banks." 

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Mike Jones

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