Ernie

Ernie

A Premium Bond is a lottery bond issued by the United Kingdom government since 1956. At present it is issued by the government's National Savings and Investments agency. The principle behind Premium Bonds is that rather than the stake being gambled, as in a usual lottery, it is the interest on the bonds that is distributed by a lottery. The bonds are entered in a monthly prize draw and the government promises to buy them back, on request, for their original price. The government pays interest into the bond fund (3.3% per annum from March 2023) from which a monthly lottery distributes tax-free prizes to bondholders whose numbers are selected randomly. The machine that generates the numbers is called ERNIE, for Electronic Random Number Indicator Equipment. Prizes range from £25 to £1,000,000 and (since October 2022) the odds of a £1 bond winning a prize in a given month are 22,000 to 1.Investors can buy bonds at any time but they must be held for a whole calendar month before they qualify for a prize. As an example, a bond purchased mid-May must then be held throughout June before being eligible for the draw in July (and onwards). Bonds purchased by reinvestment of prizes are immediately eligible for the following month's draw. Numbers are entered in the draw each month, with an equal chance of winning, until the bond is cashed. As of 2019, each person may own bonds up to £50,000. Since 1 February 2019, the minimum purchase amount for Premium Bonds has been £25. As of August 2023 there are over 120 billion eligible Premium Bonds, each having a value of £1.When introduced to the wider public in 1957, the only other similar game available in the UK was the football pools, with the National Lottery not coming into existence until 1994. Although many avenues of lotteries and other forms of gambling are now available to British adults, Premium Bonds are held by more than 22 million people, equivalent to about 1 in 3 of the UK population.

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