Changes to prize bond returns
Sir, – The NTMA announced in an advertisement in The Irish Times (July 28th) that it plans to yet again reduce the yield on the prize bond fund, but this time from 0.85 per cent down to a derisory 0.5 per cent – a further drop of more than 40 per cent. The prize structure should not try to compete with the National Lottery, rather many more smaller prizes should be spread around as weekly “fairy-dust”.
I deplore this “mean-spirited” move, which seems wholly motivated by narrow financial metrics rather than by giving due and adequate regard to the type of loyal and relatively unsophisticated savers who trust the prize bond savings product to give them a fair deal over what in effect is long-term funding for the exchequer. I suspect that many bonds lie untouched for decades and that there is a very low churn-rate.
I would urge the NTMA and Minister for Finance Paschal Donohoe to now reconsider this poor decision and revert towards the spirit and sense of the longer-term and traditional rate of 3 per cent, even in this low-interest rate climate.
The exchequer will recapture much of the “cost” of any increase in prizes through consumption-based taxes, such as VAT, excise, VRT, etc, and the “fairy-dust” factor spread throughout the land will give a boost to domestic self-confidence and joie de vivre at local levels – both badly needed in these uncertain times.
If the NTMA is genuinely concerned about vulture funds or other “unworthies” pouring into the prize bond fund for its security, liquidity and tax-free status then it could create a subset-fund with the higher yield, which would be available only to Irish resident individuals and registered Irish charities.
The prize bond concept was originally developed 62 years ago by Minister Gerard Sweetman in 1955 as a simple, secure, attractive savings vehicle for conservative individual domestic savers and their “communion money”. – Yours, etc,
JOHN BLAKE DILLON,