Dáil Éireann debate -
Tuesday, 4 Mar 2003

Vol. 562 No. 4

Written Answers - Special Savings Incentive Scheme.

Michael Ring

Question:

202 Mr. Ring asked the Minister for Finance the number of savers in the SSIA scheme; the number who have accounts based on a fixed interest return rate; and the number who have accounts based on the variable interest rate. [6149/03]

Michael Ring

Question:

203 Mr. Ring asked the Minister for Finance if SSIA variable interest account holders will be allowed to withdraw their money without being taxed, in view of money being lost on those accounts. [6150/03]

Minister for Finance (Mr. McCreevy)

I propose to take Questions Nos. 202 and 203 together.

The latest date for which figures are available for the number of special savings incentive accounts – SSIA – opened is 30 April 2002. The total number of accounts which had commenced by that date was 1,170,208. Details of the number of active accounts on the 31 December 2002 will shortly be available, following Revenue's processing and analysis of the qualified savings managers' – QSM – 2002 annual returns. The due date for submission of this return to the Revenue Commissioners was 28 February 2003.

The tax referred to by the Deputy is a 23% exit tax. It applies on amounts withdrawn early from SSIA accounts, the balances of SSIA accounts that are closed, other than on maturity, and on the interest and-or gains, not including the Exchequer contribution, of accounts on maturity.

I am informed by the Revenue Commissioners that there are no official figures as to the number of SSIA accounts which are variable interest accounts. As all accounts receive the Exchequer contribution of 25%, there is no requirement for QSMs to provide a breakdown of which of their deposit based savers receive fixed interest rates and which receive interest at a variable rate.

The Deputy's questions appear to imply that those SSIA deposit account holders who have chosen to receive a variable rate of interest from their qualified savings manager have made a loss on their investment and should consequently not be subject to the 23% exit tax applying to early withdrawals. As long as the rate payable on an SSIA deposit account is above 0%, the balance of the account will be the contribution the saver has made, the 25% Exchequer contribution, and any interest payment added to their account. As far as I am aware, all variable deposit interest SSIA accounts are in receipt of some level of interest.

The Deputy may be referring to the fact that some participants in the SSIA scheme chose to invest in equity based products, and that many equity funds, including SSIA ones, have shown a negative return during the lifetime of this scheme. I introduced this scheme to encourage people to save on a regular basis over a period of five years. To introduce a change where some people could avail of the scheme simply by depositing money for shorter periods and then withdraw these funds without penalty would undermine the basic purpose of the scheme. Accordingly I have no plans to abolish the 23% exit tax on withdrawals from any type of SSIA account.