A Prize Bond is a

lottery bond Lottery bonds are a type of government bond in which some randomly selected bonds within the issue are redeemed at a higher value than the face value of the bond. Lottery bonds have been issued by public authorities in Belgium, Ireland, Pakistan, ...

, a non-interest bearing

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issued on behalf of the

Irish Irish may refer to: Common meanings * Someone or something of, from, or related to: ** Ireland, an island situated off the north-western coast of continental Europe ***Éire, Irish language name for the isle ** Northern Ireland, a constituent unit ...

Minister for Finance by the ''Prize Bond Company DAC''. Funds raised are used to offset government borrowing and are refundable to the bond owner on demand. Interest is returned to bond owners via prizes which are distributed by random selection of bonds. Prize Bonds are also offered in Pakistan, by the Ministry of Finance, and in the UK, under the name Premium Bonds.

Background

The 1956 Finance (Miscellaneous Provisions) Act is the primary legislation under which the bonds are authorised; the similar concept of Premium Bonds were introduced in the United Kingdom at the same time. Bonds were first sold in March 1957, with the first draw held in September of that year. Originally the Bank of Ireland, as the government's banker, was the operator of the scheme. When the scheme commenced, the biannual draws were in September and March where by means of six drums the winning serial number was drawn randomly; in 1972 the serial number was increased from six to seven digits for bonds issued after that time. In 1993 regulation was made for the conduct of the draws on a weekly basis using a computer-driven

random number generator Random number generation is a process by which, often by means of a random number generator (RNG), a sequence of numbers or symbols that cannot be reasonably predicted better than by random chance is generated. This means that the particular outc ...

to determine winning numbers.

Organization

The Prize Bond Company is a joint venture between the founders An Post and

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and is based in

Killorglin Killorglin () is a town in County Kerry, Ireland. As of the 2016 CSO census, the town's population was 2,199. Killorglin is on the Ring of Kerry tourist route, and annual events include the August Puck Fair festival, which starts with the crow ...

, County Kerry. The company was created in 1989 with issued share capital between the founders of 50% each and will operate the scheme under its current (as of 2011) contract until the end of 2019. Employees of the Prize Bond Company are seconded from the respective partner,

is responsible for administration, whilst An Post is responsible for accounting and marketing in addition to conducting the draws. The National Treasury Management Agency is responsible for the regulation of the company, since the Agency was established in 1990.

Finance

Originally bonds could be purchased as in units of five Irish pounds, with a minimum purchase of £10. Today the unit price is 6.25 Euros (equivalent to IR£4.92 at the final fixed exchange rate) and a minimum purchase of €25 is required. In September 2009 the Prize Bond fund exceeded €1bn for the first time. The weekly draw is held on Fridays at 12:30 in the General Post Office,

Dublin Dublin (; , or ) is the capital and largest city of Ireland. On a bay at the mouth of the River Liffey, it is in the province of Leinster, bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. At the 2016 c ...

. Prizes range from €50 to a jackpot of €50,000 except for the last draw in each second month, when the jackpot is €1m. , each weekly draw typically awards over 8,000 prizes with a total value about €0.5m (or about €1.5m for the bimonthly draw). The annual prize giveaway in 2013 was 1.75% of the total fund. Winnings are tax-free within

Ireland Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...

. There have been some concerns that the bonds do not represent value for money for the government. Of particular concern is the cost of administration relative to the cost of interest on borrowings.{{cite web , url=http://www.thepost.ie/archives/2006/0205/prize-bond-scheme-costs-more-than-borrowing-11546.html , title=Prize Bond scheme costs more than borrowing | the Post , accessdate=2011-01-20 , url-status=dead , archiveurl=https://web.archive.org/web/20111001050918/http://www.thepost.ie/archives/2006/0205/prize-bond-scheme-costs-more-than-borrowing-11546.html , archivedate=2011-10-01 , Sunday Business Post, February 05, 2006

References

Bonds (finance) Securities (finance) Economy of the Republic of Ireland