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Media centre /
Press releasePREMIUM BONDS - MYTHS AND LEGENDS DEBUNKED20 July 2005As with any legendary figure, over the years an assortment of myths and tales has grown up around Premium Bonds and ERNIE (Electronic Random Number Indicator Equipment), the machine housed in Blackpool, that produces the winning Premium Bond numbers each month. Myths surrounding Premium Bonds range from commonly held beliefs such as “only new bonds wins prizes” to bizarre theories like “ERNIE can read minds”. With such a popular investment – 23 million people own £27 billion of Premium Bonds – that has been around for almost 50 years and relies on an element of luck, it is no wonder a web of myths and legends has arisen. Why myths arise Psychologist Donna Dawson, speculates on why myths arise: “Myths originate to deal with some aspect of life that is not fully understood such as how ERNIE picks winning Premium Bonds; it gives a person the illusion of control over their environment. The way it works, is this: if something in your daily life doesn’t make sense and doesn’t fit in with any natural laws or rules that you have already learned or experienced, then you can create a story, or ‘myth’, that will explain it. “In doing so, you may need to create new rules, or at least recognise that there may be ‘exceptions’ to your known rules. A story becomes ‘mythic’ or legendary when it is repeated often enough and long enough to both yourself and others. Myths make us feel more secure in our world, because they allow us to force order out of seeming chaos.” Myths debunked With so much at stake for so many people, NS&I has decided to debunk some of the common myths surrounding Premium Bonds and set the record straight. Bizarre myths
Top five common myths Myth 1: “ERNIE is not random”The randomness of ERNIE and the Premium Bond draw is certified by the Government Actuary’s Department (GAD). Each month, the results of the draw are sent to GAD which carries out a number of statistical tests. Once it is satisfied the results of the draw are random, GAD issues NS&I with a certificate to that effect. Without this, NS&I is not allowed to publish the numbers or issue Premium Bond prizes. Myth 2: “You have to have £30,000 Premium Bonds (the maximum holding) to win the jackpot”In July 2004, the winner of the £1 million jackpot had just £17 in Premium Bonds, purchased in 1959, and 9 of the last 12 jackpot winners held less than the £30,000 maximum. The more Bonds held, the better the chances of winning, but this doesn’t mean prizes are won exclusively by higher value holdings. Myth 3: “Only new Bonds win prizes”Each £1 Bond number has an equal chance of winning, regardless of when it was bought. Bonds purchased more recently may seem to win more often, but this is because there are more new Bonds than old ones. Since the £1 million jackpot prize was introduced in April 1994, more Bonds have been sold than in the preceding 37 years put together. Myth 4: “Old Bonds are left out of the draw”Premium Bond numbers are not programmed into or stored in ERNIE, so no numbers can be left out of the draw. ERNIE’s sole function is to generate numbers randomly. These are then matched against the existing eligible Bond numbers. Myth 5: “Only Premium Bonds from the South East win prizes”It may appear that holders in the South East win more prizes, but this is simply because there are more Premium Bonds held in the South East, compared to the rest of the UK. In the 18 months, the £1 million jackpot winners have been from the East Riding of Yorkshire, Tyne and Wear, Worcestershire, Devon, Berkshire, Gloucestershire, Cumbria, Surrey, Hampshire, Lincolnshire, the London Borough of Newham and Bristol. Sally Swait, Premium Bonds manager at NS&I comments: “Premium Bond sales have soared in recent years, with the amount invested in the last six years more than in the previous 42 years put together. People like the fact that their Premium Bond stake is a refundable investment and their capital is 100% secure, that they have a chance to win one of over one million prizes given away every month, and that all prizes are tax-free. “Given their immense popularity it is perhaps inevitable that a web of myths and legends has grown up around Premium Bonds, but I am pleased to confirm, none of these are true. The odds of each £1 Bond winning a prize are currently at 24,000-1, and every Bond has a separate and equal chance of winning a prize, irrespective of when or where it was bought. People from all over the country and with different levels of investment win prizes each month. For instance, a £3 Premium Bond bought in 1959 scooped the £1 million jackpot in July 2004.” Dear ERNIE… For some people, the desire to win is so great, that they will try anything to improve their chances, including sending songs, valentine cards and poems to ERNIE! -Ends- Notes to Editors: Premium Bonds
National Savings and Investments National Savings and Investments (NS&I) is one of the UK’s largest savings and investments providers with around 26 million customers and £68 billion invested. NS&I provides a wide range of savings and investments, including Premium Bonds, Savings Certificates, Income Bonds, Children’s Bonus Bonds, Guaranteed Equity Bonds and the Easy Access Savings Account. NS&I is able to offer a 100% capital guarantee on all the products it offers because it is backed by HM Treasury. NS&I, formed in 1861, is a government department and an executive agency of the Chancellor of the Exchequer.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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