NS&I income bond payments delayed

By ALAN O'SULLIVAN
Updated: 11:04 EST, 12 January 2010

Thousands of savers with income bonds from National Savings & Investments have not received their interest payment for January due to a technical error.

Slow coach: but NS&I says it has the problem in hand.

The issue is important as many of the 8,000 savers affected may use their income bonds to boost their monthly income in retirement.

However, the interest paid on the bonds is negligible at present, so savers are unlikely to rely on it as a major source of income.

The Government-backed savings provider will also compensate its customers for the delay: it will pay extra interest of 8% AER on any outstanding balances for each day they remain unpaid.

NS&I said the delay to the January payments, which were due on 5 January, has been caused by a 'technical error'. It assures savers it has identified the problem and is 'deploying all necessary measures to ensure that the issue is resolved'.

It is also writing to all affected customers to inform them it will pay the outstanding interest as soon as possible.

Only those customers who purchased bonds during a limited five day period between 24 and 28 November in recent years have been affected. It does not affect all income bond holders or those with any other NS&I product. Steve Owen, NS&I's channel director, said: 'We know that the delay in income payments will be an inconvenience to our customers and we apologise profusely for this.

'We are working to rectify the problem, and hope to be able to make January's income payments as soon as possible. We will provide a further update once we have the date of payment confirmed.'

NS&I's income bonds currently pay 1.71% AER on deposits under £25,000 and 2.02% AER on balances equal to or over this amount.