NS&I Premium Bonds customers warned to expect change to accounts 'tomorrow'

The Budget could imact National Savings and Investments and its Premium Bond savers, it has been warned. Jeremy Hunt, the Chancellor, is set to deliver his fiscal statement and Spring Budget on Wednesday (March 6).

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “More than 24 million savers will be hanging onto Jeremy Hunt’s every word for good news on Premium Bonds in this week’s Budget.Savings and Investments and its Premium Bond savers, it has been warned.

“They suffered a cut to the prize fund this month, and need to know whether this is the last of the bad news or just the start.” Premium Bonds, which are from NS&I and backed by the Treasury, are “unlikely to be name-checked” on Wednesday, Ms Coles said.

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But she said Mr Hunt “should confirm” NS&I’s net financing target. She went on to say: “If the Chancellor makes a change from this year’s target of £7.5billion – plus or minus £3billion – we can expect savings rates to move. The organisation has to balance three things.

"It needs to raise enough money for the Treasury as cost-effectively as possible.” She continued: “There will be greater scope for higher rates on savings products, a higher Premium Bond prize fund, or putting one-year bonds back on sale.” If the target is lowered and NSandI has to raise less, interest rates will decrease as cost effectiveness increases.

And she added: “This could be miserable news for Premium Bond savers, who would stand a lower chance of winning a prize.” She said: “Given expectations that the Bank of England will start cutting rates in the coming months, this isn’t going to last forever. The next move for these bonds is likely to be a cut.”

“In the March draw, with £25 of bonds, your chances of winning the jackpot were just under one in over 2.5 billion, and because the way prizes are distributed is so lumpy. It means that in an average year, the average person holding £1,000 in bonds will win nothing," she added.