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Second inflation linked Legal & General Deposit Bond kicks off New Year saving


Legal & General has launched a second product in its range of innovative retail prices index (RPI) linked savings plans, designed to offer investors the potential to protect their capital from inflation.

Inflation Protected Deposit Bond 2 (IPDB 2) is a five year fixed-term structured deposit bond, which offers investors a minimum return of 16.0% at maturity (3.01% AER) or, if greater 100% of RPI growth on their original investment. The new plan is available for investment for eight weeks from Monday 9 January to Friday 2 March 2012. This is a limited offer and Legal & General reserves the right to close the plan early without notice.

Legal & General’s Head of Business Development, James Harrington, says: “Although the rate of inflation has fallen back slightly in recent weeks savers are aware that the gap between interest rates and the retail prices index (RPI) continues to present an inflation risk to their capital. The Bank of England Inflation attitude survey published last month revealed that people expect level of inflation to still be at 3.5% in five years time. If that happens the purchasing power of their savings would be reduce to less than 85% of today’s value.

“Our inflation protected deposit bond reduces this risk with its RPI link and provides growth even if inflation falls over the next five years. Investors in IPDB 2 receive a fixed minimum return of 16.0% (3.01% AER), or a payment linked to RPI, whichever is greater at the end of the five year term. Plus there is the added bonus that the deposit bond aims to return their initial capital at maturity.

“Our first inflation protected bond offer proved extremely attractive to a wide range of investors. We think that our new inflation protected bond will also appeal to savers who are concerned that low interest rates combined with continued high inflation will reduce the real value of their savings over time.”

The end of the five year fixed term is 22 March 2017. If investors take out some or all of their money before the end of the fixed term they may get back substantially less than they originally invested.

The minimum investment is GBP500 and the Bond is available as a deposit plan (for individuals, pension trustees, charities and corporate applications), new cash ISA applications (up to a maximum of GB5,340) and for cash ISA transfers for which there is no maximum. The last date for ISA transfers is 17 February 2012 to allow time for completion of the transfer before the offer close date. The closing date for all other applications is 2 March 2012.

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