NS&I increases prize fund rate for Premium Bonds
- Over 52,000 more tax-free prizes to be distributed from August 2014 Premium Bonds prize draw, including an additional £1 million prize
- The details of the two jackpot winners will be announced on 1 August 2014
Following the announcement in the 2014 Budget that NS&I would help support savers by increasing the Premium Bonds investment limit to £40,000, and increase the number of £1 million prizes from one to two, NS&I has announced that the Premium Bonds annual prize fund rate will increase from 1.30% to 1.35% from 1 August 2014. The increase in the prize fund rate means that in addition to the extra £1 million prize, the number of prizes in each value category will increase or stay the same.
The annual prize fund rate of 1.35% is paid on the total number of eligible Bonds in the draw, which since the maximum investment was increased from £30,000 to £40,000 in June 2014, has increased by over £1.3 billion. Consequently, the prize fund is estimated to increase from £51,988,425 in July 2014 to £55,517,300 in August 2014, and the number of prizes is estimated to increase from 1,845,745 to 1,898,030.
|Value of prizes||Number of prizes in July 2014||Number of prizes in August 2014 (estimate)|
|Total prize fund value||£51,988,425||£55,517,300|
|Total number of prizes||1,845,745||1,898,030|
|Prize fund split Higher value prizes (£5,000 – £1,000,000)
Medium value prizes (£500 – £1,000)
Lower value prizes (£25 – £100)
|Odds of each individual (£1) Bond number winning a prize||26,000 to 1||26,000 to 1|
From 1 June 2014, Premium Bonds holders were given the opportunity to increase the amount they invested from £30,000 to £40,000, consequently giving them more chances to win tax-free prizes from ERNIE. The last time the maximum investment limit for Premium Bonds went up was in May 2003 when it increased from £20,000 to £30,000.
Over 21 million people hold Premium Bonds and they continue to remain popular with savers for a variety of reasons: for example, they offer a chance to win tax-free prizes, and of course the potential for a visit from Agent Million if you are the lucky winner of one of the two £1 million prizes.
Jane Platt, Chief Executive, NS&I, said: “Premium Bonds are one of the nation’s favourite ways to save. Today’s news is good news all round as we’re able not just to add an additional jackpot prize of £1 million, but also to increase the overall number of prizes. Many of our savers have taken the opportunity to increase their savings in Premium Bonds and as a consequence increase their chances of winning.”
The details of the two jackpot winners will be announced on 1 August 2014.
Premium Bonds facts
- Instead of paying interest, Premium Bonds are entered into monthly prize draws to win prizes from £25 to £1 million. The monthly prize fund is set by calculating one month’s interest on the total value of all eligible Bonds, at the annual prize fund rate.
- Since the first Premium Bonds prize draw in June 1957, over 290 million tax–free prizes worth £15 billion have been paid out.
- Each month, ERNIE, NS&I’s Blackpool-based random number generator, produces numbers that deliver prizes ranging from £25 up to the £1 million jackpot.
- In July 2014, ERNIE paid out over 1.8 million prizes, together amounting to over £51 million in value. The overall value of prizes paid out each month is based on the prize fund rate and the number of Bonds in the draw. This means the more money invested in Premium Bonds, the higher the overall value of prizes awarded for a given prize fund rate.
- Like all NS&I products, Premium Bonds offer investors 100% capital security because NS&I is backed by HM Treasury. Investors can cash in their Premium Bonds at any time.
Notes to Editors
- Details of Budget 2014
- Tax-free: this means that the prizes are exempt from UK Income Tax and Capital Gains Tax
- Historical Premium Bonds prize fund rates can be found here
- ERNIE stands for Electronic Random Number Indicator Equipment and has been generating the winning Premium Bonds numbers for over 50 years!
For further information, or to request an interview, please contact the NS&I media team.