Martin Lewis addresses NS&I Premium Bonds | U.Ok.Finance News
Money professional Martin Lewis has addressed ‘conspiracy theories’ round NS&I Premium Bonds as he set out precisely how the prize draw works and why huge money winners are so uncommon. Premium Bonds are a sort of financial savings account run by NS&I, which offer savers entry into prize attracts every month in return for shielding their financial savings from tax, however don’t pay curiosity out like a regular bank account – the ‘interest’ comes from accumulating winnings of between £25 and £1million. On his latest The Martin Lewis Podcast from April 2, co-host Adrian Chiles learn out a message Martin had been requested by a listener, Nigel, who needed to raise considerations about NS&I Premium Bonds ‘conspiracy theories’.He stated: “A few weeks ago I asked on a post here if anybody knew anybody who’d won a higher value prize on the Premium Bonds, guess what, noone replied, don’t you find that odd? I have my suspicions about this draw and I think someone should check the high value winners are real people. To see a certain bond winner is from North Yorkshire, who can be sure if it’s true or not? Do we need an investigation?”Martin replied right away: “No. Forgive me but I simply don’t think that’s going on.”The money professional then took his podcast listeners by means of some stats.He stated: “You’re gonna be blown away by these numbers. Do you know how many Premium Bonds £1M prizes are won each month?“Two. So how many are given in a year? 24. There are 24 £1million pound prizes a year.“How many Premium Bonds do you think there are out there?“What happens in Premium Bonds is each £1 bond is put into the draw like a ticket. So you might have 50,000 of them but it’s about the number of £1 bonds.“There are 120 billion Premium Bonds out there, the biggest single saving. There are 24 million prizes, there are 120 billion bonds.“So if we do it on a single month, you’ve got a 1 in 60 billion chance of winning a big prize.“So no I don’t think it’s a conspiracy theory thing I think it’s a maths thing. There are so many conspiracy theories about Premium Bonds. Do new bonds win more than old? No.“Every £1 bond has the same rate. The reason people think new bonds win more than old is because there are a lot more new bonds than old because now you can put £50,000 in. If you bought them 30 years ago, you were putting less in.“Do they win in certain areas of the country more or not? Yes, because certain areas of the country have more than others.“It is a random thing, I don’t think we’re being particularly duped on it, I mean I don’t like the actual product I think it’s only really good for people who are paying tax on their savings and have used up all their ISA allowance, are higher or top rate tax payers and can put the full 50 grand in.“But I don’t think we’re being duped in the sense that they’re not actually paying the prizes out, no.”NS&I says about its Premium Bonds prize attracts: “We pay out two £1 million jackpots each month. We then divide the balance of the prize fund share allocated to the higher value band equally among the remaining prize values. First we work out the number of £100,000 prizes. When there is a balance that’s less than half of that prize value, we carry it over to the share for the £50,000 prizes. Or when there’s a balance that’s at least half of the prize value, we award an additional prize of £100,000. We do this by taking the shortfall from the share for the £50,000 prizes.“We then calculate the numbers of other prizes in this value band in the same way, from highest value to lowest value. When calculating the number of £5,000 prizes, any surplus or shortfall is added to or taken from the medium value band.“From the share of the prize fund allocated to this band, we calculate the number of prizes so that there is one £1,000 prize for every three £500 prizes. Any surplus is added to the share allocated to the lower value band.“From the share of the prize fund allocated to this band, we calculate the number of prizes so that there is one £1,000 prize for every three £500 prizes. Any surplus is added to the share allocated to the lower value band.”
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