Premium bond payouts to be cut

24 July 2013

If you’re one of the 22 million people in the UK with Premium bonds, prepare to abandon hopes of a windfall – National Savings and Investments are cutting the Premium Bond annual prize fund.

premium bonds

Party pooper Jane Platt from NS&I said that the decision was a tough one, but far below the cuts made by private sector competitors.

‘To ensure we stay within our Net Financing target – and in light of our framework to balance the needs of our savers, taxpayers and the stability of the broader financial services sector - we now need to reduce the Premium Bond prize fund rate.’ She said. ‘We agonized over the decision…it’s not something we undertook lightly.’

So what does this mean for bond holders? Well, the chance of your number winning a prize is now 26000 to 1. The money in the pot will be reduced from £57 million to £49 million and the number of prizes available will fall by 150,000.

It’s part of plan to stop Premium bonds from becoming too attractive and unbalancing the market. With interest rates for savers falling, the prize must fund fall, too.

It’s a blow for savers, but Premium Bonds are still a good bet. They’re tax free and give you better returns than a savings account. But if you’re looking for your pot of gold at the end of the rainbow, you might as well start doing the lottery. Or go on the game.

TOPICS:   Investments   Economy   Motoring

8 comments

  • fibbingarchie
    It's one big conspiracy-swindle-con. The govt runs NS&I, and the govt pretends to everyone that the Bank of England independently sets the Base Rate of interest. ‘We agonized over the decision…it’s not something we undertook lightly.’ Utter pish! Keeping the price of money artificially low is THE key strategy for keeping the govts borrowing costs down.
  • Tweedskin
    "If you’re one of the £22 million people" 22 million people or a £22 million person?!?!
  • Captain.Cretin
    Wouldnt this be the SECOND cut they have made in 12 months???
  • Captain W.
    @Other Captain Yes ... but not to premim bonds
  • Captain W.
    @Original Captain Or even premium bonds
  • PlatinumPlatypus
    You can't say they give better returns than savings accounts. It is completely random whether you win a prize at all, so you could come away with nothing no matter how long you keep your bonds.
  • Mike O.
    If the odds are 26,000 to 1 just buy 26,000 premium bonds at £1 each. With the minimum payout of £25 you'll be quids in over the year. I think. Well, £300 better off roughly.
  • fibbingarchie
    @ Mike For a person experiencing average luck, the return is roughly 1.3% a year. Not exactly quids in as inflation is currently c. 2.9% Yes, the govt has arranged one big shafting of savers...

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