Leeds Building Society

Looking for an account that provides excellent peace of mind with a guaranteed real return?

The Inflation Buster Bond guarantees to pay a return of 2.00% greater than inflation, based on the Retail Price Index (RPI).

Also, the account couldn’t be easier to run – you can simply operate it through your local Branch or by post.

Make sure your savings beat inflation
The Inflation Buster Bond from Leeds Building Society links the interest you receive
to the change in the Retail Price Index (or RPI) between specific dates plus an additional
percentage, so you can be sure that your savings won’t have gone down in value
whilst they have been invested.

What is RPI?
The Retail Price Index or RPI is the official measure of how much goods and services bought by an average UK household changes. The Government also uses another index called the Consumer Prices Index or CPI. This is measured in a similar way to RPI, but does not include the cost of housing or council tax and has tended to be lower than the RPI. The inflation rate is the percentage difference between the RPI on two dates. For example, if RPI in February is 203.1 and the following February is 211.4, then the inflation rate over the period is 4.09%.

Guaranteed to beat inflation
When you save in an Inflation Buster Bond, from the Strike Date your savings rate changes annually in line with inflation (calculated between specific dates) so if inflation goes up, so does the return on your savings. But the account also offers extra interest in addition to the inflation rate, so you are safe in the knowledge that any investment in an Inflation Buster Bond is GUARANTEED to beat inflation over the term of the account.

How does it work?
Any investment you make before the Strike Date of 1 June 2008, will receive interest equivalent to the Bank of England Base Rate and this will be credited to the account on 31 May 2008. From 1 June 2008, until 31 May 2009, you will receive interest equivalent to the percentage change in RPI between 29 February 2008 and 28 February 2009 plus 2.00% gross§ pa/AER†, which will be credited to the account on 31 May 2009. Then, from 1 June 2009 until maturity (31 May 2010), your investment will attract an interest rate equivalent to the percentage change in RPI between 28 February 2009 and 28 February 2010 plus 2.00% gross§ pa/AER†, credited to the account on maturity.

Key features at a glance

Interest Rate: From account opening up to and including 31 May 2008, you will receive interest equivalent to the Bank of England Base Rate. From 1 June 2008 (Strike Date), you will receive interest equivalent to the percentage change in RPI between 29 February 2008 and 28 February 2009 plus 2.00% gross§ p.a./AER† until 31 May 2009. From 1 June 2009 you will receive interest equivalent to the percentage change in RPI between 28 February 2009 and 28 February 2010 plus 2.00% gross§ p.a./AER† until maturity on 31 May 2010.
Minimum investment: £1,000
Maximum investment: £1,000,000 (2,000,000 joint accounts)
When is interest paid? Interest is calculated daily and paid annually on 31 May (commencing 31 May 2008) and on maturity (31 May 2010).
How is interest paid? Interest can be credited to the account or transferred to another bank or building society account or another account held with the Society.
Capital Withdrawals: No capital withdrawals allowed.
When will my account mature? Your Inflation Buster Bond will mature on 31 May 2010. On maturity, the Society will transfer your investment (including interest) to a maturity account with the Society, details of which will be sent to you before maturity.

What happens if inflation is 0%?
If there was no rise in the RPI between the dates set out below (that is, inflation was 0%), you would only receive interest of 2.00% gross* on your savings. If there was deflation (that is, the inflation rate was a negative figure), you would receive 2.00% minus the rate of deflation. For example, if inflation was -1% you would only receive 1.00% gross*. If inflation was -2.00% or less, you would receive a return of not less than your capital at maturity. In the case of also making a capital withdrawal, you would receive a return of capital less any loss of interest or an equivalent amount on the amount withdrawn.

What happens is inflation is very high?
If there was a large rise in RPI between the dates set out below, you would still receive
inflation plus 2.00% gross§. For example, if inflation was 12%, you would receive
12% + 2.00% = 14.00% gross§.

When will my investment mature?

Your investment will mature on 31 May 2010. On maturity, the Society will transfer your investment (including interest) to a maturity account with the society, details of which will be provided before maturity.

What about income tax?
The gross rate of interest paid will be net of the appropriate rate of income tax (which
may be reclaimed by non-taxpayers) or, subject to the required certification, gross.
If you are a non-taxpayer and require your interest to be paid gross, an ‘Interest with
no tax deducted’ form is available on request.

Important notes

§ Gross means the rate payable before the deduction of tax .

† AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and added each year.

Investments in this account will represent shares in the Society and are subject to the Rules of the Society. Member of the Building Societies’ Association. Leeds Building Society is a participant in the Financial Services Compensation Scheme established under the Financial Services and Markets Act 2000. Payments under the Scheme are limited to a maximum payment of £35,000, that is 100% of the first £35,000 of an investor’s total shares and/or deposits in a society. Most investors are covered, including individuals and small firms. A small number of categories of shares and deposits are not covered, for example deferred shares – permanent interest bearing shares. Although most shares are denominated in sterling, all other currencies are covered. Further details are available on request from the Society. Leeds Building Society is authorised and regulated by the Financial Services Authority.

Leeds Building Society subscribes to the Banking Code which sets out standards of good banking practice for banks and building societies. Details of the Code are available at www.bankingcode.co.uk or in the leaflet "The Banking Code" published by the BBA/BSA. The Society is covered by the Financial Ombudsman Service. Leeds Building Society offers some investment products that may be operated through branches and by post and certain products which can be operated by post only.

The Society’s FSA registration number is 164992.

Other taxes or costs may exist that are not paid by Leeds Building Society.