Is the UK's National Savings still a national treasure? There is something so cosy about National Savings & Investments. More than 26m of us trust it to look after our savings - many leaving money untouched for decades safe in the knowledge that all deposits are fully protected by the government. IN Savings Unlike the wider banking industry, the organisation has survived the financial crisis with its reputation largely intact. Compared to the enmity shown towards the country's largest banks, financial advice services and the financial regulator, NS&I has emerged unscathed, regularly topping the "least consumer complaints" lists compiled by watchdogs. Even the complaints levelled against it can often be taken as a compliment of sorts. When a number of national newspapers hectored the organisation this year for not doing enough for savers, it turned out that what they wanted was a reissue of its inflation-beating savings certificates - an innovation that one adviser described as "the best savings product in the world." But what NS&I has been up to over the past few years is far from cosy. Moving savers (willingly or not) online, cutting its 150-year-old ties with the Post Office, reducing the odds on Premium Bonds and closing new products after a matter of days have left it facing the ire of savers. At the same time, its perceived concessions to the wider banking industry and low financing target left others questioning its role. Last year the chairman of the treasury select committee, Andrew Tyrie, asked whether " . . . given that the government now guarantees the first £85,000 of savings and can borrow very cheaply on the gilt markets, do we still need the NS&I?" Such existential questions may explain why there are so many things that Jane Platt, chief executive of National Savings & Investment, won't talk about. They include the lack of affordable credit in the UK ("I'm not going to talk about that") and her role on the board of the UK's new financial regulator ("I'm not going to be talking about that"). Softly spoken in a steely way, Platt answers every question put to her slowly and carefully. Trained as a fund manager, Platt was later chief executive of Barclays Stockbrokers before moving to NS&I in 2006 to become one of the UK's better-paid civil servants, with a salary of nearly £200,000. Her predecessor, Alan Cook, was responsible for increasing the value of deposits held by NS&I from £61.7bn to £71.9bn through high-profile advertising campaigns and a number of new products, including the first equity-based investment, offering 125 per cent of the growth in the FTSE 100 over five years or your money back. But in the wake of the financial crisis, this very success became a problem. Worried savers poured money into the state-backed organisation and the flow of funds into NS&I was double the normal amount in the last three months of 2008. As the European crisis rumbled on and savers faced a constant stream of bad news about the safety of banks and building societies, demand for NS&I products remained high; the organisation now holds around £100bn. The wider financial industry complains that this is just not fair. Graham Beale, chief executive of Nationwide, accused NS&I of draining retail deposits from rivals that use those funds to lend to businesses and individuals. The Building Societies Association agrees that NS&I is taking away billions that the private sector could be lending to businesses and homeowners. Jim Leaviss, a bond fund manager for M&G, has called NS&I's generous inflation-beating savings certificates as "a sop for the rich." Given that NS&I deposits are effectively an expensive form of government funding, what benefit can these products offer the taxpayer or the banking system, he asked. NS&I began life in 1861 as the Post Office Savings Bank, a scheme to encourage workers to put aside earnings for the future, and developed into a way for the government to raise funds from retail deposits in addition to government bonds. But since the financial crisis, its funding target - the amount of money it can raise through savings products - has regularly been zero, meaning it can only take in new deposits to the same amount as flows out of existing ones. In turn this has led to a pattern of releasing attractive savings products, such as inflation-beating bonds, only to pull them off the shelves a few weeks later. I'm absolutely against teaser rates and savings products that rely on customer inertia Jane Platt NS&I says it has to be responsible to the rest of the financial industry. But savers, faced with rock-bottom interest rates, say this is unfair when banks and building societies don't seem too bothered about competing for their money or lending it out. "Across Europe and the developed world we have a period of very low interest rates and of course inflation is higher so people are having a tough time and that's something we are very aware of," says Platt, when asked why NS&I does not reintroduce its popular index-linked savings certificates. Every year we have a net financing target set by the government and our target this year is zero [with leeway of £2bn]. So we have to balance the inflows and outflows and with a target like that it's not possible to bring products like savings certificates back. How could we do it? By slashing interest on other products? It's a delicate balancing act to be fair for savers and the government and banks rebuilding their balance sheets. Platt prefers to talk about the value for money that NS&I offers the UK. She points out that its ratio of costs to funds invested is 17 basis points - nearly half that of a private sector equivalent (although what this would be is unclear). It has also worked to become partially self-funding by offering payment systems to other parts of the government and has contracted out day-to-day operations to Atos, the French IT company. At the same time it has moved most accounts out of Post Office branches to cut distribution costs. So what can savers expect from NS&I in future? One thing that the organisation may look at is longer-term products. "I'm absolutely against teaser rates and savings products that rely on customer inertia," says Platt. There is a need for very long term savings products in this country. So there may well be a change in the nature of the products issued. Beyond this, it seems as though NS&I wants to revert to being the simple savings scheme it started out as. The fact that Platt seems much happier talking about cost savings than product innovation suggests that fixed income seekers shouldn't pin their hopes on NS&I to rescue them from the savings slump any time soon. Appeal of premium bonds endures First introduced in 1956, premium bonds remain the UK's most popular savings product, offering holders the chance to win up to £1m every month. But with the odds of collecting the biggest prize far slimmer than winning the National Lottery, it's not immediately obvious why. NS&I says it knows that premium bonds aren't for everyone - people who need a steady income stream from their money for example, should look elsewhere. But for anyone who likes the idea of winning big without putting their money at risk they offer a safe, entertaining way to save. Danny Cox at Hargreaves Lansdown plans to use premium bonds as a temporary home for some of the money he receives on a house sale. "If you need access to your money at relatively short notice and you don't want to risk it in the markets then premium bonds are a good short-term option, especially if you need to keep below the £85,000 protection cap that banks set on cash accounts," he says. I know that people will do this with money from the sale of a house or money they need to use for tax payments at the end of the year. And you never know, you might just win the jackpot. But what exactly are the chances of winning the top prize? Overall, Britons hold more than £44bn in premium bonds, putting the chance of a single £1 bond hitting the jackpot at 44bn to one - by contrast, National Lottery players are in with a 14m to one chance of the jackpot with each ticket. The odds of a single bond winning any prize is about 24,000 to one. The more you invest, the better your chances. The maximum sum that can be put into premium bonds is £30,000, which means that the best chance of winning £1m in a single month is 1 in 122,000. NS&I says that you can expect to win 10 prizes a year if you have £30,000 invested - although, of course, most sums will be small. The pot of money available for prizes is calculated so that it is the equivalent of every saver earning a set amount of interest rate each year - currently 1.5 per cent. So, as interest rates have fallen, the odds - particularly of a big prize - have worsened. Theoretically, you should therefore receive £1.50 for every £100 invested, but because the lowest prize amount is £25 that doesn't happen. This helps explain the persistent myth that the premium bond draw is a fix. The reality is that there is a fairly good chance that you will win nothing at all even if you hold hundreds of pounds worth of bonds for a number of years. But premium bonds do have a couple of impressive advantages. Unlike the Lottery, savers are guaranteed to get their money back and the products are backed by the Treasury, which makes them attractive to savers who worry about deposit-taker security. Cash prizes are also tax free, meaning that higher rate and additional rate taxpayers may be better off with premium bonds than ordinary cash accounts paying paltry rates of interest. This month, NS&I revealed that nearly 900,000 people have failed to claim prizes worth £44m from premium bonds - so if you have a few old premium bonds languishing in a drawer then it's worth dusting them off and putting the numbers into NS&I's website just in case you're one of them. A final word of caution: premium bonds cannot be inherited and cease to be eligible 12 months after the bondholder dies. Executors of a holder's estate must therefore cash them in quickly or the money invested will be lost. Product list shrinks If you invested £10,000 into NS&I's index-linked savings certificates ten years ago and did nothing more than reinvest when the bonds matured, you would now be sitting on £14,977 of tax-free savings still earning an inflation-beating return. There was then, dismay at the news that NS&I would not issue inflation proofed bonds this year, with higher-rate taxpayers in particular complaining bitterly about being locked out of one of the most lucrative products available. There was more bad news last month, when NS&I announced that it was cutting the rate on three savings products, the Direct Isa, Direct Saver and Income Bond, to take them back in line with savings rates across the rest of the market. These have been pushed down by the cheap funding provided to banks through the government's Funding for Lending Scheme, which has left banks less in need of retail funds. Now analysts are wondering whether premium bonds will be next in line for a rate cut. NS&I has withdrawn or cut rates on a number of its stand-out investment products in recent years, including index-linked savings certificates and guaranteed equity bonds. Its range of accounts is now a relatively plain-vanilla list that includes a children's savings account, a direct saver account paying 1.5 per cent a year, a direct Isa paying 2.5 per cent and income bonds that pay out monthly interest at a tiered rate depending on the level of your savings. Most of its accounts are now available direct (operated by post, telephone or online); only premium bonds can still be bought at a post office.