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NS&I fundraising shortfall could bring higher Premium Bonds prizes
National Savings & Investments (NS&I) has attracted less money than it hopes to raise, which could lead it to increase the Premium Bonds prize fund. The prospect comes as the bonds mark 70 years since their launch, and may benefit holders if NS&I uses higher prizes to compete for savers’ money.
About 22 million people hold £138 billion in Premium Bonds, whose prizes are tax-free and whose capital is government-guaranteed. The prize fund rate rose from 3.3 per cent in April to 4.35 per cent in August, while the odds improved from 23,000 to one to 21,000 to one; NS&I took in £4 billion in the first half of its financial year, against an annual target of £15 billion, plus or minus £4 billion. September saw £594 million added to bonds, following £356 million in August and withdrawals of £29 million a few months earlier; the article also notes that planned changes to savings-interest taxation could make tax-free prizes more attractive.
In short
- NS&I may raise Premium Bonds’ prize fund to attract savers.
- The rate has climbed to 4.35 per cent.
- About 22 million people hold £138 billion in bonds.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Raising the Premium Bonds prize fund could help NS&I attract the savings it needs while giving holders a chance to benefit from larger tax-free prizes. The bonds offer government-guaranteed capital, and a higher prize rate may make them more appealing as savings-interest taxation changes.
The case against
A higher prize fund could be a costly way for NS&I to compete for savers, especially when its recent inflows remain well below its annual target. Premium Bonds offer uncertain returns: even if the average prize rate rises, individual holders may not receive a prize, so savers seeking predictable income may prefer other options.
Read the full article at the source →
Originally published by Daily Mail as “NS&I is falling short but that’s good news for your Premium Bonds, says SYLVIA MORRIS”.