Thursday, 13 January 2011
Dáil Éireann Debate
100. Deputy Noel Ahern asked the Minister for Finance if he will provide details of the prize bond scheme, and for each of the past 15 years to state the total investments and the amount of the prize fund; the relationship with a company (details supplied) and the role of same; the person who determines the prize fund that is the Department of Finance, An Post or the aforementioned company; the reason this scheme is not run in-house or by some State agency such as the National Treasury Management Agency; if all prize bonds are paid for at the standard rate or are bulk discounts given to purchasers who promote products by giving away free bonds; the dividends that have been given to the State in each of the past few years; the duration of the contract with the company; the level of winnings in 2010 on bonds over 25 years old or over 50 years old; the level of unclaimed prizes that have gone to the dormant accounts fund or the destination to which such prizes go; and if he will make a statement on the matter. [1974/11]
Minister for Finance (Deputy Brian Lenihan): The Prize Bond scheme has been running since March 1957. Prize Bonds are part of the range of State Savings products offered by the National Treasury Management Agency (NTMA) to personal savers. All Prize Bond money is placed directly with the Irish State and forms part of the National Debt under the management of the NTMA. The repayment of Prize Bond money and cash prizes is a direct unconditional obligation of Ireland. Prior to 1989 the Prize Bond Scheme was operated by the Bank of Ireland on behalf of the Minister for Finance. In 1989 the Minister for Finance awarded the contract to operate the Prize Bond scheme to the Prize Bond Company Limited, a joint venture between An Post,a state owned company, and FEXCO, for 10 years.
When the 1989 contract expired in 1999, the NTMA held a competitive tender and a new contract was awarded to the Prize Bond Company for 10 years. Following another competitive tender in 2009 the current contract was awarded to the Prize Bond Company and this contract will expire at the end of 2019.
The Prize Bond Company subcontracts sales and marketing of Prize Bonds, accounting and the conduct of the Prize Bond draws to An Post and administration functions, such as purchase and repayment processing and maintenance of the customer database, to FEXCO.
Customers can purchase Prize Bonds through a number of channels including by telephone, by direct postal application, on-line or at any post office. Prize Bonds are priced at €6.25 each subject to a minimum purchase of €25. No discounts are given to Prize Bond purchasers. Customers can seek repayment of their Prize Bonds at any time after an initial period of three months. The amount of the repayment will always be the original purchase value.
Customers do not earn interest on their Prize Bonds. In place of interest every Bond is entered into a weekly Prize Bond draw. The number and value of prizes is calculated based on a percentage of the total sum of the outstanding Prize Bonds on the last day of the previous month. This rate, set by the NTMA and approved by the Minister for Finance, is currently 3%. Around 7,000 cash prizes are awarded each week. A €1 million prize is awarded in the last weekly draw of every month and the top prize in all the other weekly draws is €20,000.
The Company makes every effort to notify winners and publishes an annual list of the unclaimed prize bond numbers. There is also a facility on the website www.StateSavings.ie to check if Prize Bonds have won prizes. A prize is deemed unclaimed if it has not been claimed within six months of the draw date. Any unclaimed prizes remain on deposit in a Post Office Savings Bank account under the management of the NTMA until claimed by the owner, who is entitled to the prize in full plus the deposit interest earned (which is subject to DIRT).
|Year||Net funding||Prize Fund at year-end|
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