As of today, Kiwis can no longer make new investments to ANZ’s Bonus Bonds scheme, with the bank looking to wind it up no later than October this year.
Launched in 1970 by the Government, it marks the end of an era for many and comes as low-interest rates have continued to reduce the Bonus Bonds prize pool.
The bank says the Official Cash Rate, currently at a historically low .25 per cent, may fall further in early 2021 as the global economy grapples with the impacts of Covid-19.
Ben Kelleher of ANZ says those trends are likely to continue in the “medium term”.
“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," says Mr Kelleher.
Winding up the scheme includes the process of returning money to anyone holding bonds.
“Before the start of a wind up, the scheme will continue to operate, with two more prize draws expected.”
Instead of earning interest or receiving investment gains or losses, the scheme saw each eligible Bonus Bond give bondholders one entry into the monthly prize draw, where investment returns of the scheme are returned to investors as prizes. The top prize in the monthly draw is $1 million.
The September and October prize draws are intended to be held as scheduled and ANZ says customers can continue to redeem their Bonus Bonds until winding up starts.
But the bank might move to an earlier wind up if there is a heavy demand for redemptions or it otherwise considers it is in the overall best interests of investors to do so.
“Investors have two choices. 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,” says Mr Kelleher.
“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."