Yahoo Finance Treasury raises target for how much money premium bonds provider has to bring in
The Treasury has raised the target for how much money National Savings and Investments (NS&I), the premium bonds provider, has to bring in this year, as it tries to boost its cashflow amid the coronavirus crisis.
The government-backed savings giant has been told to raise £35bn, up from an original target of £6bn, which will help fund pandemic support measures.
NS&I’s "net financing target" is agreed with the Treasury every year and represents its contribution to Government financing. If the savings provider struggles to meet its target of money raised, it can boost its funds by lowering the number of prizes given to premium bond holders.
Finance experts said savers would be "breathing a huge sigh of relief" as there had been concerns NS&I could slash its savings rates to make itself less competitive, if it far exceeded its funding target.
At the start of this year, NS&I announced a raft of savings rates cuts, including plans to make the Premium Bonds prize fund rate less generous.
However in April it cancelled the planned cuts, saying the rates would remain unchanged to ensure savers are supported during the pandemic.
NS&I, which has 25 million customers, yesterday [Thu] said it has already far exceeded this year’s previous target, and delivered £14.5 billion of net financing in the first quarter of 2020-21.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said that in light of this, the previous £6bn target could have forced the provider "worry was that it would attract too much cash, and be forced to slash rates."
While NS&I now appears on track to meet the £35bn target, the savings provider said the Treasury could further revise it upwards, depending on how much extra funds need to be raised for its Covid-19 response.
The Office for Budget Responsibility this week said the pandemic has created a £372bn black hole in the public finances.
