Premium Bond
Overview
Lottery Bond
Lottery Bonds are a type of government bond in which some randomly selected bonds within the issue are redeemed at a higher value than the face value of the bond.They are government bonds and only issued by a government...
issued by the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
government's National Savings and Investments
National Savings and Investments
National Savings and Investments , formerly called the Post Office Savings Bank and National Savings, is a state-owned savings bank in the United Kingdom. It is an executive agency of the Chancellor of the Exchequer...
scheme. The government promises to buy back the bond, on request, for its original price. They were introduced by Harold Macmillan
Harold Macmillan
Maurice Harold Macmillan, 1st Earl of Stockton, OM, PC was Conservative Prime Minister of the United Kingdom from 10 January 1957 to 18 October 1963....
in his 1956 budget.
The government pays interest on the bond (pegged at 1.5% in July 2010). But instead of the interest being paid into individual accounts, it is paid into a prize fund from which a monthly lottery distributes tax-free prizes, or premiums, to those bond-holders whose numbers are selected randomly.
