Prize Bond
Encyclopedia
A Prize Bond is a non-interest bearing security
issued on behalf of the Irish
Minister for Finance
by the Prize Bond Company Limited. Funds raised are used to offset government borrowing and are refundable to the bond owner on demand. Interest is returned to bond owners via prizes which are distributed by means of random selection of bonds.
, as the government's banker, was the operator of the scheme. When the scheme commenced, the biannual draws were in September and March where by means of six drums the winning serial number
was drawn randomly; in 1972 the serial number was increased from six to seven digits for bonds issued after that time. In 1993 regulation was made for the conduct of the draws on a weekly basis using a computer
-driven random number generator to determine winning numbers.
and FEXCO
and is based in Killorglin
, County Kerry
. The company was created in 1989 with issued share capital between the founders of 50% each and will operate the scheme under its current (as of 2011) contract until the end of 2019. Employees of the Prize Bond Company are seconded from the respective partner, FEXCO
is responsible for administration, whilst An Post is responsible for accounting and marketing in addition to conducting the draws.
The National Treasury Management Agency
is responsible for the regulation of the company, since the Agency was establishment in 1990.
s, with a minimum purchase of £10. Today the unit price is six Euros and twenty five cent
and a minimum purchase of €25 is required. In September 2009 the Prize Bond fund exceeded €1bn for the first time.
The weekly draw is held on Fridays at 12:30 in the General Post Office
, Dublin. Prizes range from €75 to a jackpot of €20,000 except for the last draw in every month when the jackpot is €1,000,000. Typically (2011) each weekly draw awards over 6,000 prizes with a total value about €0.5m (or about €1.5m for the month-end draw). The annual prize giveaway is currently 3.0% of the total fund. Winnings are tax free within the Republic of Ireland
.
There have been some concerns that the bonds do not represent value for money for the government. Of particular concern is the cost of administration relative to the cost of interest on borrowings.
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
issued on behalf of the Irish
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
Minister for Finance
Minister for Finance (Ireland)
The Minister for Finance is the title held by the Irish government minister responsible for all financial and monetary matters. The office-holder controls the Department of Finance and is considered one of the most important members of the Government of Ireland.The current Minister for Finance is...
by the Prize Bond Company Limited. Funds raised are used to offset government borrowing and are refundable to the bond owner on demand. Interest is returned to bond owners via prizes which are distributed by means of random selection of bonds.
Background
The 1956 Finance (Miscellaneous Provisions) Act is the primary legislation under which the bonds are authorised. Bonds were first sold in March 1957, with the first draw held in September of that year. Originally the Bank of IrelandBank of Ireland
The Bank of Ireland is a commercial bank operation in Ireland, which is one of the 'Big Four' in both parts of the island.Historically the premier banking organisation in Ireland, the Bank occupies a unique position in Irish banking history...
, as the government's banker, was the operator of the scheme. When the scheme commenced, the biannual draws were in September and March where by means of six drums the winning serial number
Serial number
A serial number is a unique number assigned for identification which varies from its successor or predecessor by a fixed discrete integer value...
was drawn randomly; in 1972 the serial number was increased from six to seven digits for bonds issued after that time. In 1993 regulation was made for the conduct of the draws on a weekly basis using a computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
-driven random number generator to determine winning numbers.
Organisation
The Prize Bond Company is a joint venture between the founders An PostAn Post
An Post is the State-owned provider of postal services in the Republic of Ireland. An Post provides a universal postal service to all parts of the country as a member of the Universal Postal Union...
and FEXCO
FEXCO
FEXCO is an Irish-based financial services company.FEXCO was set up in 1981 by , originally to provide Bureau de change services to the Irish market. is now a global provider of , , Consumer and Internationally Traded Services....
and is based in Killorglin
Killorglin
Killorglin is a town in County Kerry, Ireland. It is located on the river Laune, which has a rowing club and a new boathouse. The population of Killorglin is 4,150 although this expands considerably during Puck Fair due to visitors and returning emigrants.Killorglin is a major activity centre...
, County Kerry
County Kerry
Kerry means the "people of Ciar" which was the name of the pre-Gaelic tribe who lived in part of the present county. The legendary founder of the tribe was Ciar, son of Fergus mac Róich. In Old Irish "Ciar" meant black or dark brown, and the word continues in use in modern Irish as an adjective...
. The company was created in 1989 with issued share capital between the founders of 50% each and will operate the scheme under its current (as of 2011) contract until the end of 2019. Employees of the Prize Bond Company are seconded from the respective partner, FEXCO
FEXCO
FEXCO is an Irish-based financial services company.FEXCO was set up in 1981 by , originally to provide Bureau de change services to the Irish market. is now a global provider of , , Consumer and Internationally Traded Services....
is responsible for administration, whilst An Post is responsible for accounting and marketing in addition to conducting the draws.
The National Treasury Management Agency
National Treasury Management Agency
The National Treasury Management Agency is the agency that manages the assets and liabilities of the Government of Ireland. It was established at the end of 1990 to borrow for the exchequer and manage the national debt...
is responsible for the regulation of the company, since the Agency was establishment in 1990.
Finance
Originally bonds could be purchased as in units of five Irish poundIrish pound
The Irish pound was the currency of Ireland until 2002. Its ISO 4217 code was IEP, and the usual notation was the prefix £...
s, with a minimum purchase of £10. Today the unit price is six Euros and twenty five cent
Cent
Cent may refer to:In currency:*Cent , a one-hundredth subdivision of several units of currency*Cent , a Canadian coin*Cent , the Dutch coin minted between 1941 and 1944*Cent , a European coin...
and a minimum purchase of €25 is required. In September 2009 the Prize Bond fund exceeded €1bn for the first time.
The weekly draw is held on Fridays at 12:30 in the General Post Office
General Post Office (Dublin)
The General Post Office ' in Dublin is the headquarters of the Irish postal service, An Post, and Dublin's principal post office...
, Dublin. Prizes range from €75 to a jackpot of €20,000 except for the last draw in every month when the jackpot is €1,000,000. Typically (2011) each weekly draw awards over 6,000 prizes with a total value about €0.5m (or about €1.5m for the month-end draw). The annual prize giveaway is currently 3.0% of the total fund. Winnings are tax free within the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
.
There have been some concerns that the bonds do not represent value for money for the government. Of particular concern is the cost of administration relative to the cost of interest on borrowings.