NS&I raises premium bond prize fund rate to 4.35%, improving odds for savers

National Savings and Investments announced that, starting with the September premium-bond draw, the prize fund rate will rise from 3.8% to 4.35% per year, expanding the prize pool by roughly £63 million to £497 million. This adjustment improves the odds for each £1 bond from 22,000-1 to 21,000-1 and adds an estimated 308,000 additional prizes. The composition of the prizes will change, with more high-value awards - the £100,000 prizes increasing from 83 to about 95 and the £50,000 prizes from 165 to 192 - while the count of £25 prizes drops from just under 2.3 million to about 1.7 million.

Experts say the move is intended to lure more cash into the tax-free product, especially for savers who have exhausted ISA allowances, though the bonds still offer no interest and depend entirely on chance. A Freedom of Information request by AJ Bell showed that 62% of holders have never won a prize, underscoring the risk. Analysts caution that the quoted 4.35% figure should not be taken as a guaranteed return, particularly as living costs pressure household budgets.