The NS&I (National Savings and Investment), formerly called the Post Office Savings Bank and National Savings, is a state-owned savings bank in the United Kingdom. Their Premium Bonds are Britain´s favourite savings product and they allow savers to win up to £1million.
This week, the company announced that it would half the winners of £50 and £100 Premium Bond prizes from May. In February, 27,221 savers won £100 in the Premium Bonds draw, whereas only 13,448 winners are expected in May, halving the number of prizes by over 50 per cent.
All other prize levels will see a reduced number of winners, with only the two £1million jackpots immune to the cuts. The changes will take the effective average interest rate down from 1.4 per cent to 1.3 per cent.
Overall, it is estimated that there will be 173,718 fewer prizes in May than in this month´s draw, reducing the odds of winning from 24,500/1 down to 26,000/1.
Almost 21 million individuals currently have NS&Is Premium Bonds, their holdings accounting for £81billion, collectively.
Meanwhile, from 1 May, the rate on NS&I´s direct saver will be slashed from 1% to 0.7% and the investment account rate will tumble from 0.8% to 0.6%.
The savings bank company´s returns have been dented by falling savings rates in the wider market and declining UK government borrowing costs, both of which it must take into account when setting its returns.