A NEW issue of savings certificates and savings bonds has been created by An Post and the National Treasury Management Agency (NTMA).

The new savings certificates offer a guaranteed turn of 34.5 per cent tax bee after five years and six months which represents an average rate of interest of 5.54 per cent a year.

Investing £1,000 in the dew savings certificates would bring a tax free return of £1,345 after the full 51/2 year term.

The new three year savings bonds offer a guaranteed return of 17 per cent tax free, which represents an average rate of interest of 5.37 per cent a year.

Individuals can invest between £50 and £60,000 in the new issue, and joint account holders can invest up to £120,000.

The rates of return for existing investors in the two savings products will not be affected.

More than £2.3 billion is currently invested in savings certificates and savings bonds, according to the NTMA's most recent figures.

In 1994 alone, savings certificates raised £238 million while £174 million was invested in savings bonds.

The success of the products has lead to private financial institutions complaining that An Post/ NTMA had an unfair advantage.

"They obviously have an unfair advantage in that they pay investors free of DIRT," said Mr Peter Kelly, chief dealer at the First National Building Society.

However, Mr Kelly said the difference between the interest rates for the new An Post products and those being offered by other institutions was not as large as it had been previously.

"They don't appear as aggressively priced as previous issues," he added.

Mr Richard Kissane, the funding products manager with the EBS, said that the new rates were "more realistic, but are still expensive for taxpayers".

The new three year rate is 0.8per cent over the gilt market rate, while the new five year rate is 0.4 per cent higher.