Santander has launched an inflation-linked savings bond that should provide savers with a return that is above the rate of inflation.
The Issue 8 bond will pay an interest return linked to 105 per cent of the growth of the Retail Prices Index (RPI).
However, there is further protection in the case of inflation not rising over the term. This has been achieved by setting the minimum return at 18 per cent, which is equivalent to 3.06 per cent AER.
Alexia Kilby, head of investments at Santander, commented: “Many savers are worried that the returns they are earning on their money will not keep up with inflation.
“With the RPI currently at 238.0, an increase of 5.4 per cent compared to the previous year, savers would need to have earned at least 5.4 per cent to ensure the real value of their money was not reduced. This is why Santander has developed the Inflation Linked Savings Bond.”
The bond is available from 7 December to 5 January, although it may close earlier if sold out. The minimum deposit is £500, and individuals must tie up their money for a five and a half year fixed term.
