Premium Bonds cut
Premium bond prizes have been slashed from April. In the biggest change for many years one of the two £1 million monthly prizes has been dropped and the value of the lowest prize halved from £50 to £25. The number of bigger prizes has also been cut to less than a fifth of those paid out a year ago.

Similar cuts have been applied to all National Savings products. Its Direct ISA – once a best buy – now pays just 1.3%, income bonds pay 0.7% on savings under £25,000 and only 1% on savings above that amount. Index linked certificates still pay 1% above inflation measured by the Retail Prices Index over three or five years. But with that measure of inflation now negative and heading down, no inflation bonus may be paid at all for the present year – just the 1%.

The cuts in interest rates on National Savings partly reflect the falling interest rates on savings as Bank Rate has plummeted to just 0.5%. But it has also happened because money is pouring into National Savings despite its low interest rates as frightened savers seek the safety of its 100% government guarantee. Almost as much new money came into National Savings in the last six months of 2008 as in the whole of the previous twelve months. With money pouring in, the rates do not have to be competitive.

Credit munch
Nearly 5000 people sent banknotes to the Bank of England for a refund in 2008 claiming they had been chewed up or eaten. The 4,916 claims represented a rather expensive diet for pets averaging £23 each. Claims were up slightly on the year before and 12% higher than the figure for 2003. More than 2500 people also confessed to money laundering – with £82,125 of banknotes ruined in the wash. But the big destroyer of notes is contamination by chemicals or destruction by fire or flood. Although the number of claims is small each is likely to be for thousands of pounds. A special unit in Leeds assesses each claim and takes account of the size of the fragments and the presence of the serial numbers and the Chief Cashier’s promise to "pay the bearer". If the claim is accepted the Bank sends a cheque for the value of the notes.

Tax haven
Despite Switzerland’s reputation as a place to salt away money to avoid paying tax on it, many of its citizens are now deliberately paying too much to the tax authorities. The central Swiss canton of Zug reports that it has about £30 million more tax than it expected. Its finance director Peter Hegglin told the German newspaper Sonntag.CH that people were treating the tax department as a savings bank. They have realised that the tax authorities pay 2% interest – tax-free – on any money owed to the taxpayer. That is far more than they could earn in regular bank accounts, some of which pay as little as 0.1%. So the canny Swiss are leaving their overpayments languishing to get a bit more interest.

This cunning plan is not possible in the UK. HM Revenue & Customs now pays no interest at all on tax it owes to us. The rate came down to 0% on income tax and national insurance in January and the rate on overpaid inheritance tax followed in March. However, if you are reclaiming tax that has been owed for a long time HMRC will still pay interest – which is officially called ‘repayment supplement’. Any money owed before 27 January 2009 will attract some interest and the rate paid was as high as 4% for money owed in the first half of 2007.

Payments delayed
Widows under 60, jobseekers, lone parents and some disabled people under pension age will in future get their benefits later and less often. Since April new claims for their benefits have been paid fortnightly in arrears instead of weekly in advance as they used to be.

The benefits affected are income support, incapacity benefit, severe disablement allowance, widowed mother’s (and parent’s) allowance, and widow’s pension.

Some you win, some you lose
The Government has revealed that from April 70,000 pensioners who get invalidity allowance – an addition to incapacity benefit for those who claimed it some years ago well before pension age – may have been paid the wrong amount. About 45,000 have been paid up to £3 a week too much and 25,000 have been paid as much as £1.80 a week too little. The payments will be corrected within the next few months. No past overpayments will be recovered but underpayments will be refunded at some point before the autumn.

Even bigger errors have been made in the salary related pensions paid to some people who worked in the civil service and armed forces and as teachers and judges. This error has gone on since 1978. About 100,000 have been overpaid up to £140 million and a slightly smaller number may have been underpaid by £100 million. Pensions should have been adjusted from April. Past overpayments will not be recovered but underpayments will be refunded. No timetable has been set for doing this.