|Posted: January 5, 2009, 3:44 am - IP Logged|
A Premium Bond is a lottery bond issued by the United Kingdom government's National Savings and Investments scheme. The government promises to buy back the bond, on request, for its original price.
The government pays interest on the bond but, instead of the interest being paid into individual accounts, it is paid into a prize fund from which a monthly lottery distributes tax-free prizes, or premiums, to selected bond-holders whose numbers come up.
The machine that generates random numbers for the lottery is called ERNIE, which stands for Electronic Random Number Indicator Equipment. There are many different prizes ranging from £50 to the top prize of £1,000,000, of which there have been two per month.