THE TELEGRAPH: Premium Bonds are to substantially improve their payout, adding 600,000 extra monthly winners and upping the size of the prize pool.
Over 23 million consumers own Premium Bonds, making them the country's most popular savings product, but over the last year investors have become increasingly upset by the very poor returns they offer.
After enormous pressure from savers, National Savings & Investments, the Government-backed institution that administers Premium Bonds, has increased the payout to attract new savers as well as improve the rate for its existing investors.
From next month 1.75 million savers will receive a prize of some sort – up from the 1.13 million who received one in September. They could receive anything from £25 to £1 million landing on their doormat.
Also, the total payout will increase from £33.8 million to £52.5 million, an increase of 50 per cent.
The prize fund rate – an approximation of the rate of return – has increased from 1 per cent to 1.5 per cent. This is the first time in living memory that the rate of return has been a full percentage point above the Bank of England interest rate.
However, because Premium Bonds are tax-free the rate of return in reality is far better, when compared with all the other savings accounts on the market, which are quoted gross, not net. For a higher rate tax payer, the rate has jumped form 1.66 per cent to 2.5 per cent. >>> Harry Wallop and Myra Butterworth | Wednesday, September 16, 2009
