NS&I changes premium bonds prize structure and variable rates on savings
NS&I has announced that from the April prize draw onwards one of the two monthly Premium Bond jackpot prizes of £1 million will be replaced by a wider mix of prizes in the monthly draws, allowing more people to win but still retaining the chance of winning the £1 million jackpot prize. Similarly, a new £25 Premium Bond prize will be introduced and used alongside the existing prizes (ranging from £50 to £1 million). These changes have been introduced because Premium Bond holders say that maintaining the chances of winning tax-free prizes on a regular basis is particularly important to them.
In addition to these changes, NS&I is reducing the Premium Bond prize fund rate from 1.8% to 1%. This rate will be held at least until the June 2009 draw even if there are further changes to the base rate. This is the first change NS&I has made to the prize fund rate since December last year - during which time the Bank of England base rate has fallen from 3.0% to 0.5%. The revised prize fund rate will come into effect from 1 April 2009.
The current odds of each £1 Premium Bond number winning any prize will remain unchanged at 36,000 to 1, so with average luck an investor with £30,000 in Premium Bonds could win 10 tax-free prizes a year. The unclaimed premium bond prizes range all the way from £25 up to £100,000. NS&I gives away over one million tax-free* Premium Bond prizes each month.
NS&I is also reducing the interest rates on its other variable rate savings by up to 0.50%, following movements in the Bank of England base rate. The revised interest rates will come into effect from 18 March 2009.
Peter Cornish, Director of Customer Offer, NS&I, said: “Premium Bonds are unique and are hugely popular with our customers. Replacing one of the £1 million jackpot prizes with a wider mix of prizes and introducing the new £25 prize category will help us maintain the frequency of tax-free prizes - something that we know is particularly important to Premium Bond holders. ”
He continued, “We always aim to reward as many of our customers as possible from the prize fund available, together with having the right mix of prizes. We continue to pay out hundreds of thousands of tax-free prizes each month and customers also benefit from a 100% guarantee on their investment because we are backed by HM Treasury.”
As always, NS&I will communicate all of these changes to customers via a range of outlets, including press advertisements and NS&I’s website, as well as putting an updated Premium Bonds prize draw details leaflets in all Post Offices and updated interest rates leaflets in most branches of WH Smith throughout the UK.
Notes to editors
* Tax-free means that interest and prizes are exempt of from UK Income Tax and Capital Gains Tax
Gross means the taxable rate of interest without deduction of UK Income Tax.
When interest rates are set on tax-free products, NS&I takes into account the amount of tax the Exchequer would have received if the product had been taxable.
NS&I is one of the UK’s largest financial providers with 27 million customers and over £94 billion invested. It is best known for Premium Bonds, but also offers inflation-beating savings account guaranteed equity bonds, savings bonds easy access accounts and children’s bonus bonds in its range. All products offer 100% security, because NS&I is backed by HM Treasury.
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