[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Saturday, 20 May 2006, 02:57 GMT 03:57 UK
Premium bond prize pot to shrink
Money
The odds of winning a prize are set to remain the same at 24,000 to one
The monthly prize fund for Premium Bonds will fall in June due to the rising costs of operating the scheme, it has been announced.

There will still be 1.27 million prizes available each month, National Savings & Investments (NS&I) said, but the value of these prizes will fall.

Their value will drop from 76.6m in May to 75.4m next month.

The rate of return on the products will be reduced from 3% a year to 2.95%

However, the odds of winning a prize are set to remain the same at 24,000 to one.

'Fair returns'

A participant who has average luck and 30,000 invested could still win around 15 prizes each year.

The change has been blamed by NS&I on the increasing costs associated with running Premium Bonds.

It also has to make payments to HM Revenue & Customs to compensate the government for the fact that the products are tax-free.

"We will always aim to provide consistent and fair returns, and because of further increases in the market we can again increase the rates on our fixed rate products," said Peter Cornish, marketing director at NS&I.

"Although we have had to pass on a small increase in costs to Premium Bond customers there are still over 1.27 million prizes awarded each month and for June these will be worth over 75m."


SEE ALSO:
National Savings explained
21 Sep 05 |  Business
Premium Bond prizes up for grabs
17 Aug 05 |  England
Woman makes historic 1m bond win
01 Aug 05 |  Hampshire
Search for 1m prize-winners
24 Jun 03 |  Wales


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific