• issue with choice of three year and five year*
• Retail Prices Index plus up to 0.50% gross/0.49% AER* p.a.
• On sale now – available until Thursday 29 March 2012

The Post Office has launched the fourth issue of the popular Inflation Linked Bond, open to applications from Thursday 19 January until Thursday 29 March 2012.

Applications can be made via post and application packs can be requested by calling 0800 169 7500 or downloaded online by visiting www.postoffice.co.uk/savings.

Forms must be posted in time to be received by the Post Office by Thursday 29 March at the latest.  The bond may be withdrawn earlier if it is oversubscribed before this date.

The new issue offers a choice of two fixed terms:
• Three year term – offers annual RPI inflation rate plus 0.25% gross 0.24% AER* fixed each year, paid at maturity
• Five year* term – offers annual RPI inflation rate plus 0.50% gross 0.49% AER* fixed each year, paid at maturity.
The rate of return is based on the annual Retail Price Index as measured in March each year, plus a guaranteed fixed return of 0.50% or 0.25% gross per year - ensuring customers' savings are always beating the rate of inflation¹.  RPI includes the cost of mortgage interest payments and has historically run at a higher level than the Consumer Price Index (CPI) rate. 
For example, the annual RPI rate in December 2011 was 4.8%. If this Inflation Linked Bond had been available in the year before (and used December RPI readings as the basis for the return) the annual return for the first year would be 5.3% (4.8% + 0.50%) for the five year term, or 5.05% (4.8% + 0.25%) for the three year term.

Post Office Director of Savings and Investments, Richard Norman, said: “Since the launch of the first Inflation Linked Bond in 2010, inflation has fluctuated but has continued to remain high, leaving savers worried about the effect it will have on their savings.
“In an uncertain climate, it’s important to offer consumers the chance to have peace of mind with their savings.  The fourth issue of our popular Inflation Linked Bond means that people have the opportunity to save, safe in the knowledge their money is protected against the ravaging effects of inflation.
“Each issue of our Inflation Linked Bond has proved extremely popular, so we urge savers to ensure applications are made as soon as possible. We will aim to honour all applications, but funds are limited, and we may need to withdraw the bond before the official closing date”
The bond can be opened with a single deposit of £500 (minimum investment £500 and maximum £1 million) with the return calculated annually and paid at maturity.  No additional deposits are permitted.  The account cannot be accessed until the end of the fixed term.
To find out more about the Post Office Inflation Linked Bond or any other savings product, call 0800 169 7500 or go to www.postoffice.co.uk/savings.
The Post Office has recently received the following awards for its popular savings range:
• Best High Street Savings Provider - Consumer Moneyfacts Awards 2011
• Best Savings Account for consistency of rates - Moneywise Awards 2011
• Best Savings Account - What Investment Readership Awards 2011
• Best Fixed Rate Bond Provider - 2011 Moneynet Awards
• Best Fixed Rate Savings Provider - 2010 Moneyfacts Awards.

ENDS

Full product details:
• Fixed term beginning Friday 27 April 2012, for either three years or five years and one day
• Five year and one day term - return of RPI plus 0.50% gross/0.49 AER* fixed each year
• Three year term - return of RPI plus 0.25% gross/0.24% AER* fixed each year.
• If RPI is negative in any year, the annual return for that year will be the fixed rate (0.5% gross for the five year term or 0.25% gross for the three year term)
• All returns are paid at maturity
• One lump sum deposit only - minimum £500, maximum £1,000,000
• No additional deposits or withdrawals during the fixed term
• Early closure permitted in exceptional circumstances, subject to a charge (meaning customers could get back less than their original investment)
• Applications must be received by the Post Office by Thursday 29 March 2012
• The bond may be withdrawn earlier if over subscribed.
*ILB4 offers two terms; a three year term or five years plus one day term
For more information, please contact:
 
Stuart Taylor         
Post Office Press Office        
02920 392 572
07715 480146                                                                  
stuart.taylor@royalmail.com

Notes to Editors:
*Gross rates do not take into account deductions of Income Tax. AER stands for Annual Equivalent Rate and illustrates what the interest would be if interest was paid and compounded once each year.
¹Inflation as measured by the Retail Price Index (RPI) in March each year

www.postoffice.co.uk