Press releases

Innovative Legal & General Deposit Bond linked to RPI provides inflation protection.

James Harrington - Head of Commercial Implementation, Platforms & Distribution
James Harrington
Head of Structured Solutions

11 November 2011

James Harrington - Head of Commercial Implementation, Platforms & Distribution
James Harrington
Head of Structured Solutions

Legal & General has launched a new, innovative savings plan, which is designed to offer investors the potential to protect their capital from inflation whatever the level of the RPI over a 5 year term.

The new fixed term structured deposit bond, Inflation Protected Deposit Bond 1, offers investors a minimum return of 17.5% at maturity (3.278% AER) or, if greater 100% of RPI growth on their original investment. The new plan is available for investment for eight weeks from Monday 14 November to Friday 6 January 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 said, "The rate of inflation, as measured by RPI, rose to 5.6% in September*, which is its highest point since June 1991 (5.8%). If the RPI (or for that matter the CPI) stays at this level, or goes higher, savers are facing a real inflation risk to their capital. Their hard earned savings will be quickly eroded over a short time by the combined evils of high inflation and low saving rates. In fact current levels of inflation (around 5% per year) could erode as much as a fifth of the value of money held in a typical deposit account over a five year period. That means the purchasing power of savings would reduce to 80% of today's value.

Savers who invest in our inflation protected deposit bond will be assured to know that they receive 3 way protection from inflation risk. First their original capital will not be eroded by continued high inflation because their savings are linked to the RPI. Second, if the rate of inflation falls, they will receive a fixed minimum return of 17.5% at the end of the five year term, which offers investors the potential to beat inflation. And third, savers also have the peace of mind of knowing that the deposit bond aims to return their initial capital at maturity.

We think this offer will prove extremely attractive to cautious investors who are concerned that the current high levels of inflation may, if not checked, have a significant impact on the real value of their savings over time."

The end of the five year fixed term is 25 January 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 £500 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 £5,340) and for cash ISA transfers for which there is no maximum. The last date for ISA transfers is 23 December 2011 to allow time for completion of the transfer before the offer close date. The closing date for all other applications is 6 January 2012.

Commission is 2.5% of the sum invested. Full details for this product are available on the Legal & General dedicated adviser website www.landgstructuredproducts.com.

Advisers can also contact Adviser Direct on 0845 273 0008 (Lines are open from 9am to 5pm Monday to Friday. We may record and monitor calls. Call charges will vary). Or e-mail structured.team@landg.com

*Note: Source – the Office for National Statistics, 18 October 2011

Notes to editors

  1. The contract start date is 25 January 2012 and the end of the fixed term is 25 January 2017. The maturity payment date is 27 January 2017.
  2. This is a limited offer and may be subject to change and early termination at the discretion of Legal & General according to market conditions, without notice.
  3. This plan is not suitable for customers who may need to access their money before the end of the five year term or who may be seeking a definite return.
  4. The growth of the Retail Price Index will be measured between the November 2011 Retail Price Index level and the November 2016 Retail Price Index level.
  5. The Inflation Protected Deposit Bond 1 is designed to return the original investment at the end of the fixed term. 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.
  6. Taxation - as this is a deposit investment any growth received is treated as interest. The cash ISA (and an ISA transfer) is a tax free investment. Any growth received through the deposit plan will be paid net of UK income tax at the basic rate (currently 20%). Non tax payers can reclaim this tax. Higher and additional rate tax payers will have further tax to pay. SIPP, SSAS, charity or company applicants can be paid without the deduction of income tax but only where sufficient documentary evidence is provided.
  7. The Deposit taker is The Royal Bank of Scotland Plc (RBS).
  8. he return on the original investment and any applicable returns are dependent on RBS paying this money to us. This might not happen if RBS default or become insolvent and unable to repay us this money. If they don't repay us, the investor could lose some or all of their original investment. RBS is a member of the Financial Services Compensation Scheme, which covers the first £85,000 each customer holds with each bank or building society.
  9. The rules of the FSCS may change and the FSCS may take a different approach on the application of these rules to a particular bank or building society depending on the circumstances of the failure of that bank or building society to pay back what it owes. Investors can find out more about the FSCS (including amounts and eligibility to claim) by visiting its website www.FSCS.org.uk or calling 0800 678 1100.

The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 30 June 2011, we were responsible for investing £370 billion worldwide on behalf of investors, policyholders and shareholders. We also had over seven million customers in the UK for our life assurance, pensions, investments and general insurance plans.

Inflation Protected Deposit Bond 1 is provided by Legal & General (Portfolio Management Services) Limited. Registered office: One Coleman Street, London, EC2R 5AA
Registered in England 2457525.


For more information please contact:

Mike Connolly

Mike Connolly
PR Manager Savings

t: +44 (0) 1737 375365
m: +44 (0) 7802 503917
e: mike.j.connolly@landg.com


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