Cecilia Keaveney
Ceist:15 Cecilia Keaveney asked the Minister for Finance the plans he has to provide incentives to encourage young people to save; and if he will make a statement on the matter. [26830/00]
Ceisteanna – Questions. Priority Questions. - Saving Incentives.
The Deputy will appreciate that young people, by virtue of their youth, may not always be overly concerned about putting something by for a rainy day. Often, it is only when we get a bit older and, we hope, wiser that we begin to appreciate the need to accumulate savings for the future.
As regards incentives to encourage young people to save, there is in place a number of savings schemes operated through An Post and managed by the NTMA, most of which are suitable for the young and not so young alike. These are savings certificates, savings bonds, instalment savings and prize bonds. The returns on these schemes are tax free.
In addition, as regards very young people, An Post, acting on behalf of the National Treasury Management Agency, operates two savings schemes for children in primary schools. Savings stamps are the more popular of the schemes. The stamps are sold at 50p each to children either directly at post offices or through the schools. The stamps are fixed to a savings card which, on completion, can be used to open a deposit account in the Post Office Savings Bank or to make a lodgement to an existing Post Office Savings Bank account. The savings club is the second savings scheme. Under this scheme, the school operates a single Post Office Savings Bank deposit account on behalf of pupils, with two teachers acting as trustees. The teachers keep a record of the individual amounts deposited in that account by each pupil.
In addition, other general savings schemes where there is a tax incentive to save include special savings accounts, where a reduced rate of DIRT of 20% applies, and the related special investment accounts. There are also generous tax incentives for pension provision to encourage young people to save from an early age in respect of their retirement.
I thank the Minister for his reply. The post office savings stamps, which cost 50p, were only 5p when I bought them. That shows inflation has increased. Does the Minister agree that young people are pushing up inflation because they are inclined to spend money as they receive it? Many people do not have money put aside to buy a house. We should introduce new incentives for young people to save so they can buy a house or a car instead of spending their money. The current incentives are not adequate to encourage people to save.
I agree that young people up to their mid and late twenties do not seem to save to the same extent as my generation or previous generations. That might reflect a change in society. There is evidence to suggest that the savings ratio is falling. However, I always caution against taking too much notice of the savings ratio. It is a residual figure in the national accounts and it cannot be subject to the same criteria, regardless of whether it is exact. It is the figure left over and it has been revised on many occasions by a considerable degree. Young people do not spend as much time saving.
I do not agree that young people who spend money contribute to inflation. The other argument could be made that they contribute to economic growth. If young people have a lot of money, they are inclined to spend it and this means there is great activity in our towns and villages. It is a separate debate as to whether it contributes to inflation. There is an element of some services inflation but it is a far broader question whether that alone is contributing to inflation. I am considering changes in the budget and the subsequent Finance Bill to encourage people to save on a voluntary basis. We all should encourage the notion, particularly in younger people, that they should save because it is only prudent and good times do not last forever.