Jim O'Keeffe
Question:136 Mr. J. O'Keeffe asked the Minister for Finance the total estimated cost to the State over the five years of the special savings incentive scheme; and the benefits to the State of the scheme. [26380/02]
Written Answers. - Special Savings Incentive Scheme.
It is not possible to give a definitive answer as to the eventual cost of the special savings incentive scheme as it is subject to a number of variables such as where participants die, withdraw from the scheme or vary their monthly contributions. Using the existing data and assuming that these variations will broadly cancel each other out, it was estimated that the full year cost to the Exchequer would be in the region of €525 million.
However, anecdotal evidence is that significant numbers of account holders recently raised their monthly contributions, and on that basis the 2003 budget tax forecasts prudently assumed a total annual cost of the order of €600 million to 2005. As the cost depends on customer behaviour, about which no-one can be certain, I cannot give a more definitive figure of future costs to the Exchequer, but obviously the costings are kept under ongoing review and analysis.
The main benefit to the State of the scheme is that it will encourage a regular pattern of savings. The scheme should also be seen in the context of this Government's philosophy that we should as a people provide for the future. This policy has seen not just the introduction of this scheme, but also measures to encourage individual pension provision and the national pensions reserve fund. The scheme has attracted 1.17 million participants, and I see the popular and widespread participation in the scheme as a vindication of it and the principle behind it.