ANZ winds up Bonus Bonds scheme
ANZ Investment Services says it will stop accepting new investment into the Bonus Bonds scheme as low interest rates continue to reduce the prize pool.
“We’re always reviewing our investment products to ensure they best serve the interests of investors,” says ANZ retail and business banking managing director Ben Kelleher.
“Low interest rates have reduced the investment returns of the scheme, which affects the size of the prize pool. It has now become apparent those trends are likely to continue in the medium term. The Official Cash Rate, currently at a historically low 0.25 per cent, may fall further in early 2021 as the global economy grapples with the impacts of Covid-19,” says Ben.
“The ANZIS board decided it is no longer appropriate to accept new investment into Bonus Bonds, with immediate effect, and intends to start winding up the scheme no later than the end of October. Winding up the scheme includes the process of returning funds to bondholders.
“Before the start of a wind up, the scheme will continue to operate, with two more prize draws expected.”
Bonus Bonds was launched by the New Zealand Government through the Post Office in 1970.
The Bonus Bonds website had crashed on Wednesday morning.
An ANZ spokesman says the site experienced high demand causing delays for some bondholders.
He says ANZ was working to resolve this as quickly as possible.
Instead of earning interest or receiving investment gains or losses, each eligible Bonus Bond gives bondholders one entry into the monthly prize draw, where investment returns of the scheme are returned to investors as prizes.
In the year to March 2019, Bonus Bonds paid out $39.6 million in prizes on the $3.3 billion of $1 Bonus Bonds on issue. File image/SunLive.
The top prize in the monthly draw is $1 million.
In 2015, investors had a one-in-17,447 chance of winning. In the year to March last year, it was one-in-32,296 but 99.91 per cent of all prizes were worth $50 or less.
Prizes worth just 1.2 per cent of the scheme’s assets were awarded.
The September and October prize draws are intended to be held as scheduled and customers can continue to redeem their Bonus Bonds until winding up starts.
However, ANZIS might move to an earlier wind up, for example, if there is a heavy demand for redemptions or it otherwise considers it is in the overall best interests of investors to do so.
Ben says investors could redeem their Bonus Bonds before the scheme started to wind up, or stay in the scheme and be entitled to a share of the remaining reserves, after expenses, when the scheme is wound up.
“Those who choose to stay during the wind-up phase will have their investments locked in during this process, which may take up to 12 months.
“The board believes current reserves are sufficient for bondholders to be confident they will receive back their initial investment. The reserves represent the surplus of the value of assets in the scheme over the claims of bondholders.”
With Covid-19 restrictions in place, Kelleher urged bondholders to consider when was the appropriate time for members to redeem their bonds.
It was not immediately necessary for a member to go to an ANZ branch, he says.
In the 12 months to the end of March 2019, Bonus Bonds paid out $39.6 million in prizes on the $3.3 billion of $1 Bonus Bonds on issue.