Bonus Bonds prizes dwindle

New Zealanders have just over $3.2 billion stashed in Bonus Bonds, but the odds of winning have been dwindling, and so has the pool of prizes.

ANZ, which runs Bonus Bonds, announced on Friday that it will no longer allow people to cash in Bonus Bonds without delay at ANZ branches, making them wait two days for their money.

But the announcement coincided with new regulations that revealed more information about the giant fund behind Bonus Bonds, and put the spotlight on the worsening chances of bondholders winning a prize.

Between March 2012 and March 2016 the monthly prizes paid out fell from $6.37 million to $4.63m despite the number of $1 Bonus Bonds on issue rising from 2.9b to 3.2b.

Bonus Bonds are like perpetual lottery tickets with each bond giving the holder one chance of winning a cash prize each month. If the bond holder tires of owning Bonus Bonds, they can cash them in at any ANZ bank branch.

Around one in three people own Bonus Bonds, but they have seen the odds of winning a prize in any month fall from 1 in 12,882 to just 1 in 19,731 for each bond bond they own.

Each month there is one $1m prize, and at least one prize of $100,000 and one prize of $50,000, though there are many smaller cash prizes.

The dwindling odds and prize pools were the result of persistently low interest rates, ANZ spokesman Stefan Herrick said.

‘‘The low interest rate environment we’re in is impacting the size of the prize pool,’’ Herrick said.

‘‘The scheme only invests in fixed interest and cash assets. Lower rates equals lower investment income equals lower prize pool.

‘‘If interest rates rose we would expect to see the prize pool increase, all other things remaining equal.’’

With the prize pool decreasing and the number of bonds on issue increasing, the odds have increased, he said.

The new disclosure required under the Financial Markets Conduct Act showed almost $1b of the $3.13b of investments held by the Bonus Bonds fund were in ANZ band deposits and bonds with the rest split between investments in New Zealand Government bonds and deposits in other New Zealand banks like ASB, BNZ and Westpac.

ANZ had no plans to cut fees, Herrick said.

Bonus Bond management fees are 1.28 per cent a year compared to an average of 0.74 per cent on Kiwisaver conservative funds, which also invest in low-risk cash and fixed interest.