The chance of winning a million with Premium Bonds has halved, following National Savings and Investments' decision to withdraw one of its two jackpot prizes. The Premium Bond prize fund rate has reduced from 1.8 per cent to 1 per cent and will be held at this level for at least the April, May and June 2009 prize draws.
The second £1m jackpot prize will be replaced by a wider mix of prizes in the monthly draws. A new £25 prize has been introduced alongside the existing prizes (ranging from £50 to £1m).
The current odds of each £1 Premium Bond number winning any prize remain unchanged at 36,000 to 1, so with average luck an investor with the maximum £30,000 in Premium Bonds could win 10 tax-free prizes a year.
The odds of a single £1 Premium Bond winning the jackpot are about 1 in an eye-watering 19 billion. However, someone with the maximum holding of £30,000 will see these odds drop to around 1:600,000.
With the National Lottery, the odds of a single ticket winning are one in 14 million. The key point here is that each Premium Bond enters the holder into a chance of winning the jackpot every month - with the National Lottery, your money is lost if your numbers don't get picked.
Hugo Shaw, business manager at independent financial advisers Bestinvest says: "Sadly, although the redistribution of one of the £1m jackpots has been championed by many people, the impact on their winning is likely to be small."
"In March 2008 there was a total prize fund of £108m, of which nearly £75m was handed out in prizes of £50. In contrast, March 2009 had a prize fund of £58m, with £53m available as £50 prizes. The prize fund for April 2009 is expected to be just £32m, with £28m available for £50 and new £25 prizes. So, turning one of the jackpots into a number of smaller prizes won't stretch as far as people have been hoping.
"In fact, there is the risk that removing one of the jackpots could make matters worse. Many people will have come to accept (albeit not like) the fact that the prize fund has dropped and be of the view they couldn't earn significantly more elsewhere - so why not hang on for the chance of winning big. For people in this camp, removing one of the jackpots could remove one of the last reasons for keeping their bonds and see them invest their money elsewhere instead."
