Dáil Éireann debate -
Tuesday, 23 Jun 1992

Vol. 421 No. 4

Written Answers. - Interest Rates on Savings Certificates.

Michael Noonan

Question:

97 Mr. Noonan (Limerick East) asked the Minister for Finance if his attention has been drawn to the fact that banks and building societies are now offering about 10 per cent net on deposits in the special savings accounts announced in the budget which will attract 10 per cent DIRT tax and that Post Office Savings Certificates are no longer a competitive investment; if he will raise the interest on Post Office Savings Certs from the 7 per cent on the 11th issue, and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern)

The management of the State personal savings schemes, including the determination of the interest rate payable on Savings Certificates, is now the responsibility of the National Treasury Management Agency.

The terms and conditions of Savings Certificates are reviewed continuously by the Agency by reference to other investment opportunities available in the marketplace. There is no evidence that Savings Certificates are uncompetitive. Net receipts in the current year, up to 12 June, amount to almost £85 million. This compares to £40 million for the same period last year.

Competition is likely to increase as a result of the introduction of the 10 per cent rate of DIRT on special savings accounts by 31 December 1992. Savings Certificates will, however, remain the only Irish investment media which can offer tax-free fixed rates of interest for a period of five years with a State guarantee. Rates of interest on the new special savings accounts, as well as being subject to the 10 per cent tax, may be fixed for a maximum of two years.