Managing director says low rates have “reduced the investment returns of the scheme”
ANZ Investment Services New Zealand has announced that it will no longer be accepting new investments into the Bonus Bonds Scheme, as low interest rates have “affected the size of the prize pool” - something which doesn’t look likely to change anytime soon.
Managing director retail and business banking Ben Kelleher noted that the Official Cash Rate (OCR) may still have further to fall, and says ANZIS will be winding up the Bonus Bonds Scheme from the end of October.
“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,” Kelleher said.
“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.”
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Bonus Bonds was launched through the Post Office in 1970 by the New Zealand Government. Each Bonus Bond gives its holder an entry into a monthly prize draw, and the investment returns of the shame are returned in the form of monthly prizes. The top prize is $1 million.
Kelleher says the September and October prize draws are expected to happen as normal before the scheme winds up completely.
“Investors have two choices,” he explained. “They can redeem their Bonus Bonds before the scheme starts 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,” Kelleher concluded.
“The reserves represent the surplus of the value of assets in the scheme over the claims of bondholders.”
