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ANZIS stops new investment in Bonus Bonds and moves to wind up scheme

Media announcement 26 August 2020

ANZ Investment Services (New Zealand) Ltd (ANZIS) today announced it will stop accepting new investment into the Bonus Bonds Scheme as low interest rates continue to reduce the prize pool.

“We’re always reviewing our investment products to ensure they best serve the interests of investors,” said Ben Kelleher, Managing Director Retail and Business Banking for ANZ.

“Low interest rates have reduced the investment returns of the scheme which affects the size of the prize pool. It has now become apparent those trends are likely to continue in the medium term. The Official Cash Rate, currently at a historically low 0.25%, may fall further in early 2021 as the global economy grapples with the impacts of Covid-19.

“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. Winding up the scheme includes the process of returning funds to bondholders.

“Before the start of a wind up, the scheme will continue to operate, with two more prize draws expected.”

Bonus Bonds was launched by the New Zealand Government through the Post Office in 1970. Instead of earning interest or receiving investment gains or losses, each eligible Bonus Bond gives 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 customers can continue to redeem their Bonus Bonds until winding up starts. However, ANZIS might move to an earlier wind up, for example, 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,” Mr Kelleher said.

“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.

“The board believes current reserves are sufficient for bondholders to be confident they will receive back their initial investment. The reserves represent the surplus of the value of assets in the scheme over the claims of bondholders.”

With Covid-19 restrictions in place, Mr Kelleher urged bondholders to consider when was the appropriate time for members to redeem their bonds, and information can be found in the FAQs below.

It was not immediately necessary for a member to go to an ANZ branch Mr Kelleher said.

Please read the event disclosure statement (115kB). This contains important information about the decision of ANZ Investment Services (New Zealand) Limited, the Manager of the Bonus Bonds Scheme, to stop accepting new investments into the Bonus Bonds scheme from 25 August 2020. The event disclosure statement is available in hard copy on request by calling 0800 266 374.

Your questions answered

You may have a number of questions following this announcement so we’ve provided the following FAQs to help answer these.

Future of Bonus Bonds

For some time, low interest rates have reduced the investment returns of the scheme which affects the size of the prize pool. Since 2009 the annual prize pool has dropped from $100m to $34m in 2020. Covid-19 and its impact on the global economy and interest rates have exacerbated this. With interest rates forecasted to remain low, and possibly reduce further, we expect the prize pool to reduce even more. This will mean the chance of a Bonus Bond winning a prize will reduce further. Due to this we believe it’s no longer appropriate to accept new investments and we intend to return money to existing customers.

ANZ Investment Services (New Zealand) Limited (ANZIS) is a wholly owned subsidiary of ANZ Bank New Zealand Limited and is part of the ANZ Group of companies. ANZIS is the manager of the Bonus Bonds scheme and is responsible for its management and administration.

We acknowledge that is may be upsetting for some customers. Bonus Bonds has been a much loved product in New Zealand for over 50 years, however ongoing low interest rates has meant that the amount of money we have available for Bonus Bonds prizes has significantly reduced. Since 2009 the annual prize pool has dropped from $100m to $34m in 2020. With the OCR currently at 0.25% and the possibility of it falling further we expect the prize pool to reduce even further. This will mean the chance of a Bonus Bond winning a prize will reduce further. So we believe it’s no longer appropriate to accept new investments and we intend to return money to existing customers.

  • We can not accept any Bonus Bond purchases from new or existing customers.
  • Existing customers can continue to redeem their Bonus Bonds through our standard redemption processes, including via MyBonusBonds.
  • All existing recurring purchases via MyBonusBonds (e.g. direct debits) will be automatically stopped. Customers with regular payments (e.g. automatic payments) will need to cancel these themselves.
  • We intend that the prize draws will continue to be held in September and October. Winners will be notified through the standard processes.
  • Purchases received and processed before 7pm on Tuesday 25 August will proceed as normal.
  • Any purchases made after 7pm on Tuesday 25 August (via automatic payment, bill payment, direct credit or through MyBonusBonds) will be stopped and the money will be returned back to the customer. Note - there might be a small delay as we process this.
  • All existing recurring purchases submitted via MyBonusBonds will be automatically stopped.
  • Customers with regular payments (automatic payments, bill payments or direct credits) will need to cancel these.

Investors have two choices. They can redeem their Bonus Bonds in the coming months before the scheme starts to wind up and benefit from any prize draws that they are eligible for, or stay in the scheme and benefit from the remaining prize draws and a share in the reserves when the wind up is completed. 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.

In a wind up we will turn all of the remaining assets in the scheme into cash, pay expenses of the scheme and then return the rest to customers in proportion to the number of Bonus Bonds they hold. As we currently have more than $1 of assets for every Bonus Bond issued there is a reasonable chance that people will receive slightly more than $1 per unit in a wind up, however do note while we don’t expect to pay less than $1 per Bonus Bond it is possible that the price could be slightly less than $1.

Investors have always paid $1 for a Bonus Bond and been able to redeem them for $1. As with all managed investment schemes there is the possibility that an investor can lose money and in the case of Bonus Bonds that the price could be changed up or down. In order to keep the price of a Bonus Bond at $1 we hold reserves as a buffer to protect against this. As at 18 August 2020 there were 3,288,878,640 (3.2 billion) $1 bonds on issue. This reflects the amount due to investors should they decide to redeem. The market value on 18 August 2020 of the investments (excluding cash and interest amount) is $3,343,410,434 ($3.3 billion). The difference between the bonds on issue and the market value reflects the amount that the investment portfolio has in reserve to protect the $1 bond investment based on the valuation at 18 August 2020.

We will endeavour to contact all bondholders via direct mail or email and will pay out any funds to your bank account as listed in our registry system. This may be a good time to check that your details we hold are up to date.

We recognise that the timing is challenging in relation to possible COVID-19 lockdowns, however it would not be appropriate for us to accept any further investment into Bonus Bonds at this time. We remind existing customers that while they may wish to redeem units now, they are not obligated to do so.

There will be no impact to those who choose to hold on to their Bonus Bonds. We hold a large number of liquid assets to support high levels of redemptions, however if we think it is in the best interest of bondholders, we could possibly suspend redemptions to treat all bondholders equally. If we decide to wind up the scheme, bondholders are entitled to a share of the reserves, which means they may receive more or less than $1 per unit, however do note while we don’t expect to pay less than $1 per Bonus Bond it is possible that the price could be slightly less than $1.

The timeframe to wind up the scheme would be dependent on a lot of factors - for example, the remaining funds under management and the timing of investment maturities. It could take 12 months or more to complete a wind up of the Bonus Bonds scheme.

In a closure situation, no new Bonus Bonds can be purchased, but you can still redeem your Bonus Bonds and the monthly prize draw will continue.

In a wind up situation, no Bonus Bonds can be purchased or redeemed and we will return funds to investors as they become available. The monthly prize draw will stop at this point. You will not be able to cash in your Bonus Bonds, instead you will receive one or more distributions from the scheme during the wind up process. There may be a significant delay to receive all distributions from the scheme. It is also possible that the total distributions you receive will be slightly more or less than $1 for each Bonus Bond held, however do note while we don’t expect to pay less than $1 per Bonus Bond it is possible that the price could be slightly less than $1. We will ensure that we act in the best interests of all bondholders in a wind up situation.

No. The Bonus Bonds scheme is a trust registered under the Financial Markets Conduct Act 2013 as a managed investment scheme. It is completely separate from other products offered by ANZ Bank New Zealand Limited.

Bonus Bonds and Lotto are different products and are not readily comparable. For instance after a prize draw your Bonus Bonds remains eligible for future draws while a Lotto ticket expires.

The decision was made on 25 August 2020, the changes came into effect immediately and there was not sufficient time to contact bondholders individually. A media release and updates to our website are the quickest way to communicate these changes to customers. Additionally we are sending emails and letters to all of our bondholders that we hold up to date contact information for. This may be a good time to check in with us the ensure your contact information is correct.

The scheme currently has sufficient assets and reserves to cover all Bonus Bonds on issue, whichever option you choose. The reserves represent the surplus of the value of assets in the scheme over the claims of bondholders.

The Bonus Bonds scheme is a trust registered under the Financial Markets Conduct Act 2013 as a managed investment scheme. As with all managed investment schemes there is the possibility that an investor can lose money and in the case of Bonus Bonds that the price could be changed up or down. You can get independent financial advice if you are unsure whether you should continue to hold Bonus Bonds.

The management fee has been significantly reduced over the past few years from 1.28% to 0.40% reflecting the current economic environment. This includes a reduction from 0.95% to 0.40% from 1 July 2020.

ANZ offer a range of savings and investment products that we believe are more suitable for our customers in this economic environment. We encourage customers to seek financial advice or contact ANZ to discuss the options available.

We’ve let you know as soon as we could. The decision to close the scheme to new investment was made on 25 August 2020 and by law the changes come into effect immediately.

Bonus Bonds is a unique product. We recommend bondholders consider the information available on the Bonus Bonds website and on the disclose register (disclose-register.companiesoffice.govt.nz), in order to make a decision for themselves. Alternatively you can seek independent financial advice. The Financial Markets Authority (FMA) give some tips on choosing an adviser and how to find one.

Finding an adviser 

Choosing an adviser 

 

Alternatively you can call ANZ on 0800 269 296 and we can refer you to an independent adviser in your area.

ANZ has posted a media release to announce changes to customers and inform the general public. This information has also been posted on the ANZ and Bonus Bonds websites and via social media to assist in reaching a wider audience. Additional media announcements are scheduled in both print and radio over the coming weeks.  

The challenges Bonus Bonds faces are due to the low interest rate environment a new manager would not be immune to these challenges.

Yes. Further Bonus Bonds will be issued to the value of any prize won in future prize draws where you have set your payment method to reinvest. However, if one of the major prizes ($1m, $100k, $50k) is won by you, we will contact you directly to organise prize payment.

Cashing in Bonus Bonds

Investors have two choices. They can redeem their Bonus Bonds in the coming months before the scheme starts to wind up and benefit from any prize draws that they are eligible for, or stay in the scheme and benefit from the remaining prize draws and a share in the reserves when the wind up is completed. 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.

In a wind up we will turn all of the remaining assets in the scheme into cash, pay expenses of the scheme and then return the rest to customers in proportion to the number of Bonus Bonds they hold. As we currently have more than $1 of assets for every Bonus Bond issued there is a reasonable chance that people will receive slightly more than $1 per unit in a wind up, however do note while we don’t expect to pay less than $1 per Bonus Bond it is possible that the price could be slightly less than $1.

  • Suitable forms of identification (PDF 66kB)
  • Proof of address
  • Evidence of name changes e.g marriage certificate
  • Proof of bank account (for non-ANZ account holders)

ANZ has a wide range of options available to assist you with your savings and investment goals and we’d love to talk to you about what may suit your needs. You can call ANZ on 0800 269 296 or make an appointment at your local branch. To find out more information on the options available, you can also check out anz.co.nz.

Call 0800 269 296 

Find an ANZ branch 

 

If you have $50k or more, your investment time horizon is 4 years or greater and you would like to talk to an ANZ financial adviser about options other than cash accounts or term deposits, we can direct you to an ANZ financial advisor to discuss investment options. An ANZ financial adviser can provide advice tailored to your situation and create a plan to help you achieve your financial goals. Alternatively, you can get independent financial advice. The Financial Markets Authority (FMA) give some tips on choosing an independent adviser and how to find one.

FMA Links

Finding an adviser 

Choosing an adviser 

There are no present plans to limit Bonus Bonds redemptions. However, in certain circumstances (as described in the governing document for the scheme), we can suspend cash-in payments for up to 30 days if we have good reason to think that cashing in Bonus Bonds is not practicable, or would not be in the best interests of all bondholders.

  • If you have an active MyBonusBonds account you can redeem online by selecting ‘Cash in My Bonds’ from the left hand menu. You can either select an existing bank account number or add a new bank account number to have the funds deposited into.
  • For ANZ customers who do not have MyBonusBonds access, we encourage you to complete the contact form or call the contact centre on 0800 266 374
  • If you have an active MyBonusBonds account you can redeem online by selecting ‘Cash in My Bonds’ from the left hand menu. You can either select an existing bank account number or add a new bank account number to have the funds deposited into.
  • For non-ANZ customers who do not have MyBonusBonds you can visit any ANZ branch. Don’t forget to take appropriate identification and proof of your address (PDF 66kB) with you.

We recognise that the timing is challenging in relation to COVID-19. We remind existing customers that while they may wish to redeem their Bonus Bonds now, they are not obligated to do so and there is no rush to head into your local branch. We intend to continue the prize draws until 31 October 2020.

However if you do want to redeem your Bonus Bonds please be assured that we will prioritise helping our most vulnerable customers, and those who haven't been able to cash in or update their Bonus Bonds online. We’re following Government guidelines to help keep our customers and staff safe. 

You will need to:

  • Meet contact tracing requirements by either: 
    • The Ministry of Health COVID Tracer app by scanning the QR code or 
    • Providing name and contact details to the branch concierge  
  • Maintain physical distancing of 2 metres. 

Note that our staff will have PPE available to them.

If you’re activated for MyBonusBonds you can do it online. Or if you are an ANZ customer you can complete the Contact Form or call the contact centre to get activated for MyBonusBonds. If you’re not an ANZ customer we’ll need to identify you in person. You can do this at any ANZ branch – find the one nearest you.

If the Bonus Bonds are still live and you haven’t previously cashed them in or transferred them, you will still be able to redeem them.

The Bonus Bonds Governing Document states that if a bondholder is aged less than seven years old, Bonus Bonds must be paid to their parent/guardian. Once a bondholder is seven years old, Bonus Bonds must be paid to the Bondholder. If the bondholder is under 15 years their parent/guardian can provide redemption instructions. Anyone aged 15 and over must provide instructions themselves, we may require identification and proof of address and bank account.

Only the legal owner of the Bonus Bonds can redeem them.

If you have access to MyBonusBonds you can redeem online by selecting ‘Cash in My Bonds’ from the left hand menu. You can either select an existing bank account number (if you have previously provided us with a direct debit) or add a new NZ bank account number to have the funds deposited into.

If you do not have MyBonusBonds you can have the proceeds deposited to any NZ account, or sent to an overseas bank account. This can be done by completing a cash-in request form and mailing it to the Bonus Bonds Centre, along with certified copies of identification. Note: the following details will be required if you request the proceeds to be sent to an overseas account:

  • The account number and full account name of the overseas account to be credited
  • The full name and branch address of the overseas bank
  • The SWIFT, BSB or IBAN number for the overseas bank
  • Confirmation of the currency the funds are to be transferred in
  • A signed acknowledgement that you accept the international payment fee detailed below.

An international payment fee of $28 applies. You may also be charged fees by the intermediary banks used to deliver payments to the recipient bank. The intermediary and recipient bank involved may deduct fees from the amount transferred. These fees vary depending on the currency and bank you are sending the payment to.

 

The address to send all correspondence to is:

Bonus Bonds Centre
Freepost Bonus Bonds
P.O. Box 898
Dunedin 9054
New Zealand

Need to get in touch?

If you still have an enquiry and would like to hear from one of our team please get it touch in one of the following ways:

If you're an ANZ customer or are activated on MyBonusBonds:

Fill in our Contact Form and someone from the ANZ team will be in touch within 3 working days.

If you're not an ANZ customer:

Gather up any information you have around your bondholding and pop into any ANZ branch. Don’t forget to bring some identification with you - find out what you need (66kB).

IMPORTANT - PLEASE READ:  This website contains general information about Bonus Bonds and is intended as a guide only.  See the Bonus Bonds product disclosure statement (closed to all investments) and the Event Disclosure Statement which have been lodged on www.business.govt.nz/disclose.

Bonus Bonds are units in the Bonus Bonds Scheme (‘Scheme’) and are not deposits or other liabilities of ANZ Bank New Zealand Limited ('ANZ') or Australia and New Zealand Banking Group Limited, or their subsidiaries ( together the ‘ANZ Group’). ANZ Group does not stand behind or guarantee the Scheme. Investments are subject to investment risk, including possible delays in repayment, and loss of income and principal invested. ANZ Group will not be liable to you for the capital value or performance of your investment. ANZ Investment Services (New Zealand) Limited is the manager and issuer of the scheme.