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Premium savings bonds
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A government lottery, under the guise of a security, first introduced in 1956. It is a security in that interest accrues on each bond; it is a lottery in that the total interest is pooled and distributed to a random few, determined by a computer known as ‘Ernie’ (Electronic Random Number Indicator Equipment). The amount of interest, totalled and fed into the pool, is based on a periodically fixed percentage of total funds invested and may be changed at any time by three months’ notice given in the London, Edinburgh or Belfast Gazette. The bonds may be purchased in £1 units at most Post Offices and Clearing Banks, in minimum quantities of ten units (maximum holding £10,0(X)). They are available to persons aged sixteen or over and to younger persons on trust through a parent or guardian. They cannot be bought by clubs or corporate bodies. There are prize draws, the prizes being divisions of total accumulated interest, at weekly and monthly intervals. Prize-winners are notified at their last recorded address; any change of address should be registered. Unacclaimed prizes are retained until winners notify the post office of their new address. Bond holders may cash in their bonds at any time, provided that notice of intent is given, but the amount received will be no more than the face value of the bond. On the other hand, those persons lucky enough to win prizes are not subject to any U.K. taxation on their prize money.
Reference: The Penguin Business Dictionary, 3rd edt.
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