Bonus Bonds was a New Zealand unit trust that was created in 1970 with a cash-based reward plan. Bonus Bonds were introduced by the New Zealand government through the Post Office Savings Bank under the Unit Trusts Act 1960, with the purpose of encouraging New Zealanders to save money. With almost one-third of New Zealanders owning bonds, it was the country’s largest retail unit trust.
What’s going on with Bonus Bonds in New Zealand?
ANZ said on Tuesday that it is still waiting for 804,000 bondholders to contact them with their account information. This includes those who may have received Bonus Bonds as a gift or who may have purchased Bonus Bonds in the past.
On August 26, 2020, ANZ Investment Services (NZ) Ltd announced that it would stop accepting new Bonus Bond investments after more than five decades. Low interest rates “continued to diminish the prize pool,” according to ANZ managing director retail and business banking Ben Kelleher.
ANZ NZ managing director of personal banking Ben Kelleher confirmed that bondholders who stayed in the plan through the wind-up process would be paid $1.10 per Bonus Bond.
“If there are any remaining monies to be disbursed,” Kelleher stated, “another minor payment may be made next year.”
Unclaimed funds will be sent to the Treasury, according to ANZ. A date has yet to be determined.
ANZ encourages anyone who believes they have Bonus Bonds to contact them “now or early in the New Year.”
Bondholders should contact ANZ to confirm their bank account details for monies to be paid into if they haven’t previously done so.
“We need to make sure payment is made to the account the client wants the funds sent to, even though we hold account information for several bondholders,” Kelleher explained.
ANZ said it aims to make a payment by Christmas to the 232,000 bondholders who have already given their account information.
Payments would “continue to be processed regularly, until completion of the wind-up,” according to an ANZ spokesman, for bondholders who have yet to contact them with their information.
Bondholders can speak with the team about what kind of identification is needed and what information is currently accessible, according to Kelleher.
Q6. How can persons who believe they have Bonus Bonds but no records go about getting them?
People who received Bonus Bonds as a youngster or as a present may have forgotten about them.
ANZ encourages anyone who believes they may have Bonus Bonds to contact them.
Bondholders can get further information by calling 0800 266 374 or visiting the Bonus Bonds website.
Is it possible to lose money on Bonus Bonds?
What exactly are reserves? Bondholders had always paid $1 for a Bonus Bond, which they could then redeem for $1. As with any managed investment program, there was the risk of losing money, and in the case of Bonus Bonds, the price might be altered up or down. We kept reserves as a buffer to protect against a drop in the unit price of Bonus Bonds in order to keep the price of a Bonus Bond at $1. These reserves are included in the total pool of assets that will be awarded to bondholders throughout the wind-up procedure.
At the end of March 2021, the scheme’s reserves were $93 million. We are now paying $1.10 each Bonus Bond as an initial payment, with $0.10 coming from reserves. If there are any remaining reserves to be divided, an additional minor payment may be provided at a later date when the wind-up is completed.
How Do Bonus Bonds Work in New Zealand?
ANZ Investment Services (New Zealand) Ltd (ANZIS) has announced that it would no longer accept new Bonus Bonds Scheme investments as low interest rates continue to diminish the prize pool.
ANZ’s Managing Director Retail and Business Banking, Ben Kelleher, said, “We’re continuously examining our investment products to ensure they best serve the interests of investors.”
âLow interest rates have cut the scheme’s investment returns, reducing the prize pool’s size. Those tendencies are now clear to be likely to persist in the medium run. As the world economy grapples with the effects of Covid-19, the Official Cash Rate, which is currently at a historically low 0.25 percent, may fall even more in early 2021.
âWith immediate effect, the ANZIS Board has concluded that it is no longer suitable to accept fresh investment into Bonus Bonds, and the scheme will be wound up by the end of October. The procedure of winding up the scheme includes returning payments to bondholders.
âThe scheme will continue to function prior to the start of the wind-up, with two further prize draws expected.â
In 1970, the New Zealand government issued Bonus Bonds through the Post Office. Instead of earning interest or receiving investment profits or losses, each qualified Bonus Bond provides bondholders with one entry into a monthly prize draw in which the scheme’s investment returns are distributed as prizes. The monthly draw’s top prize is $1 million.
The prize draws for September and October are expected to go ahead as planned, and customers can continue to redeem their Bonus Bonds until the winding up process begins. ANZIS, on the other hand, may choose to wind up earlier if there is a high demand for redemptions or if it otherwise believes it is in the best interests of investors.
âInvestors have a couple of options. They can either redeem their Bonus Bonds before the scheme begins to wind down, or they can stay in the scheme and be entitled to a part of the leftover reserves after expenses when the scheme is wound up, according to Mr Kelleher.
Those that stay during the wind-up period will have their investments locked in for the duration of the process, which might take up to 12 months.
âThe board feels that current reserves are sufficient to assure bondholders that their initial investment will be repaid. The reserves are the difference between the value of the scheme’s assets and the demands of bondholders.
With the Covid-19 limits in place, Mr Kelleher advised bondholders to think about whether it was the best time for them to redeem their bonds, and provided information in the FAQs.
Mr Kelleher said that a member’s visit to an ANZ branch was not required right away.
What is the procedure for obtaining Bonus Bonds?
Your contribution will be deposited into any New Zealand bank account you specify. Simply phone the Bonus Bonds Wind-up Contact Centre between the hours of 8 a.m. and 6 p.m., Monday through Friday, on 0800 266 374.
Please note that you do not need to visit an ANZ branch; when you call, they will instruct you on how to supply your bank account information.
In many circumstances, you will be able to offer your bank account information over the phone right away.
It might be good to have the information of your Bondholding on hand when you call (for example, your Bondholder number or a serial number from a Bonus Bonds certificate).
In December of current year, the ANZ expects to pay $1.10 for each Bonus Bond owned. Bondholders may get a small payout at a later date if there are any money left over after the Bonus Bonds scheme is closed.
Have Bonus Bonds been distributed?
The remaining $680 million owing to investors who had their money locked up in the defunct Bonus Bonds fund for more than a year has been reimbursed by ANZ.
ANZ announced the closure of the Bonus Bonds fund in August last year, offering the largest single winding up of a fund in New Zealand history, with $3.25 billion to be returned to investors.
However, after initially planning to repay the remaining bondholders by October of this year, ANZ announced that the payment plan had been postponed.
The delays were caused by a lack of IT professionals and the necessity to invest in IT systems in order to make payments to investors, according to the report.
What is the value of Bonus Bonds?
Each bonus bond is worth $1, and you can invest or withdraw without penalty. A bonus bond’s value does not rise or fall, so if you invest $1,000, you will receive $1,000 in bonus bonds when you withdraw your money. The odds of receiving a prize are the same for each $1 bond.
What is the average Bonus Bond return?
Q: Should Bonus Bonds be considered a medium to long-term investment, such as three to five years?
Every month, we are given a gift. We’ve won a $5000 prize two months in a row during the last five years.
The following are the returns on our investment, according to my Quicken program: Last year’s return was 11.5 percent; the average return over the last two years was 7.1 percent; and the average return over the last five years was 6.7 percent.
Bonus Bonds pay no interest, for those who haven’t been reading this column recently. Every month, prizes ranging from $20 to $300,000 are given away.
According to the Bonus Bond Centre, the average reward return is 3.4 percent. As a result, for everyone like you who has done better, there must be someone who has done worse.
Investing in Bonus Bonds is similar to buying stock in a single company.
Many people do this, perhaps because they inherited the shares, or because they were given them as part of a demutualization or power company giveaway, or because they work for or know the company.
One distinction between single stocks and Bonus Bonds is that the more bonds you own, the less probable your returns would be extreme high or low. This is not the case when buying a single share.
Bonus Bond returns, on the other hand, are notoriously fickle. As your numbers reveal, you’ll do better in certain years than others. You might have a bad year next year.
Because most individuals prefer to know where they stand, the market for volatile products must give greater average returns or no one will buy them.
Even while Bonus Bonds aren’t taxed, their average return of 3.4 percent isn’t great for a volatile investment.
Please keep in mind that letters should not be more than 200 words. We won’t publish your identity, but if we need further information, please supply it as well as a phone number (ideally during the day).
Are Bonus Bonds subject to taxation?
If a unit holder’s total payments from the Scheme are equal to or less than $1 per Bonus Bond held, the unit holder should not be required to pay income tax on such payouts. For each tax year, the Scheme’s practice has been to keep and pay tax on its investment income.
What is the value of an ANZ Bonus Bond?
For each Bonus Bond held, bondholders will earn $1.10. Someone who owns 100 bonds, for example, will receive $110.
If there are any remaining funds after the wind-up, a little further payment (perhaps a couple of cents per Bonus Bond) may be issued at a later date after the wind-up is completed.
Or they can donate the funds to the Cancer Society?
Yes. ANZ has offered bondholders the option of giving their funds to the Cancer Society of New Zealand, as a long-term key sponsor of the organization.
The Cancer Society is the only organization that funds cancer research and provides assistance to anybody afflicted by disease, including their relatives and friends, regardless of their age or kind of cancer.
Over 6000 bondholders have already decided to donate their money to the American Cancer Society. As a result, ANZ will be transferring more than $100,000 on behalf of these investors.
What is ANZ doing to contact the remaining bondholders?
A dedicated team at ANZ is trying to contact over one million investors who are set to receive a share of the remaining monies in the plan.
Due to a variety of causes, such as people moving house or residing abroad, it can be difficult to track down some people.