What happened?
National Savings & Investments (NS&I) has announced significant changes to its Premium Bonds scheme, effective from the April 2026 draw. The odds of winning a cash prize will lengthen from 22,000 to one to 23,000 to one, while the prize fund rate will be reduced from 3.60% to 3.30%. This means that for every £10,000 invested, bondholders can expect an average payout of £330, down from £360.
Why it matters
This adjustment is expected to leave millions of Premium Bondholders feeling demoralised, as the likelihood of winning decreases alongside the average returns. Andrew Westhead, NS&I Retail Director, stated that these changes reflect the current savings market conditions and aim to balance the interests of savers, taxpayers, and the financial services sector. Despite the cuts, NS&I anticipates that the April 2026 draw will still feature nearly six million tax-free prizes, amounting to around £375 million.
What’s next?
As the changes take effect, bondholders will need to reassess their investment strategies. The total number of prizes is projected to decline from over 6.1 million in December 2025 to approximately 5.9 million in April 2026. However, the number of £25 prizes is expected to increase, while the number of £1 million prizes will remain unchanged at two per month. This marks the sixth reduction in the prize fund rate since September 2022, prompting questions about the future attractiveness of Premium Bonds as a savings option.
