Days of Bonus Bonds draw to a close

Monday, 2 November 2020

The days of the bonus bond are nearly nigh as the scheme begins its wind-up process.

Investors in Bonus Bonds can expect more money than they put in, but they may have to wait a year or more for their windfall.

The wind-up of the Bonus Bonds scheme began on Saturday night and investors still holding them without applying for a redemption will be unable to cash them in.

The ANZ, which oversees the scheme, said that so far over 200,000 redemptions had been processed and $2.3 billion paid out to bond holders since August 25, when the bonds stopped being sold.

Bonus Bonds was launched five decades ago by the former Post Office Savings Bank, in the days before Lotto. Critics called it a low-risk form of gambling.

But with low interest rates continuing to reduce its prize pool, the decision was made to close the scheme and wind it up in October.

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ANZIS, the scheme’s manager, then wrote to all bondholders, urging them to register for a distribution.

The final amount will be subject to the expiry of term deposits that the scheme is invested in.

Ben Kelleher, managing director for ANZ's retail and business banking arm, said he was confident bondholders still in the scheme would receive a share of reserves over and above their original investment.

Bondholders could receive more than one payout, he said.

“While the process to confirm the final amount that each bondholder is entitled to is complicated … we expect to distribute a large portion of what each bondholder is entitled to sooner than this.''

Before that happened, however, the bank still had to determine the cost of the wind-up and receive bank account numbers from bondholders to make payments.

Bonus Bonds gave investors the chance of winning a $1 million prize each month for every bond they held.

However, they were criticised by financial advisers for the low odds of winning and the prize payouts compared to the costs of the fund. In the 12 months to the end of March 2019, Bonus Bonds paid out $39.6 million in prizes on the $3.3b of bonds on issue.