Prize Bond awards slashed - along with State Savings interest rates
There will be fewer Prize Bonds millionaires from next month - following a decision to reduce the number of top prizes.
The change will see €1m prizes being paid out only four times a year to those who have winning Prize Bonds. This is down from six top prizes a year.
And a range of interest rates on State Savings schemes sold by An Post have also been radically reduced.
The move is part of a wide-ranging slashing of the interest rates on State Savings schemes, many of which are tax-free.
It is the fifth time in four years that the rates and Prize Bond pay-outs have been reduced.
The move narrows the options for savers - at a time when banks are continually cutting deposit rates, with many paying little or nothing.
There was some surprise that the National Treasury Management Agency (NTMA), which controls both the Prize Bonds and the State Savings schemes, chose the Sunday of a Bank Holiday weekend to announce the slashing of savings rates and the reduction in the Prize Bond prize fund.
A spokesman for the NTMA defended the interest rate decreases and the smaller Prize Bond pay-outs, saying: "The new issues and interest rates reflect changes across the retail savings market and the fall in the cost of borrowing by the State. However, the changes also maintain the balance of remaining competitive and providing good value for the holders of State Savings products.
"All State Savings money is placed directly with the Government and repayment is a direct unconditional obligation of the Government."
From July there will be a €1m Prize Fund paid out four times a year - in March, June, September and December.
At the moment, the top prize is paid out six times a year - every second month.
Next month there will be 10 weekly prizes of €1,000 and 10 of €500. The rest of the prize fund will be made up of €50 pay-outs. Just 0.85pc of the amount of money put into Prize Funds will now be paid out. Currently, it is 1.25pc of the fund.
And the interest paid on a string of popular State Savings schemes have been reduced, by up to half in some cases.
The schemes to be hit by interest cuts include the two versions of the National Solidarity Bond, which was introduced during the worst of the financial crisis in a bid to encourage householders to fund the Exchequer.
The 10-year version of the Solidarity Bond will now pay out 16pc over a decade, down from 25pc. This works out at 1.5pc a year, down from 2.26pc. The return is tax-free.
The interest on the four-year version of the Solidarity Bond has been halved to 2pc over the term, or 0.5pc a year.
The popular three-year Savings Bond will now return 0.33pc a year, down from 0.83pc, tax-free.
Those with existing bonds will retain the old rates, but anyone investing from Tuesday will get the lower rates.
NTMA has also abolished the popular Deposit Account Plus.
Some €19bn is invested in State Savings. Banks are known to have lobbied the Government in the past in a bid to force reductions in the rates paid out on State Savings schemes.
The move reflects the continued fall in international interest rates and the drop in the cost to the State of raising funds on the market.