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Friday, 14th August 2020
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SSIAs to account for ¬£800 million per annum Back  
Credit institutions are expected to benefit from the extra revenue generated by the Government‚€ôs Special Savings Incentive Accounts introduced in the Finance Bill 2001.
Industry has welcomed the Government-backed special savings incentive accounts and are estimating that it could generate between £500 and £800 million per year.

Sources put the figure at up to £800 million p.a. based on an average uptake amongst the population. At the lower end of this estimate a total of £2.5 billion would be saved over the five year period - a substantial extra amount for Irish credit institutions.

Comenting on the initiative, Martin Walshe General Manager - Lending of EBS Building Society nevertheless said that the amount of extra funds flowing into the Irish system was not the real benefit of the scheme, but rather that it would foster a savings habit amongst the public.

Finance Minister Charlie McCreevy introduced the scheme to add 25 per cent to every pound saved in the Finance Bill 2001.

Financial institutions have responded enthusiastically to the savings scheme and are currently working at various levels on new products to be in place for the launch on 1 May 2001.

Under the scheme, the Exchequer will top up an individual‚€ôs monthly savings amount by 25 per cent for a fixed term of five years. The minimum monthly investment is ¬£10 and up to a maximum of ¬£200. The cash payment by the Government is equal to a return of about 9 per cent after tax each year. Income or gains from this savings investment will be taxed at 23 per cent and will be deducted by the participating financial institution at the end of the five year period.

Welcoming the scheme Martin Nolan of the Irish Association of Investment Managers said institutions would be offering a range of cost effective savings products to the public over the next few months.

Each individual will be allowed only one account and must supply his or her PPSN to the financial institution concerned.
The accounts will be managed by a range of institutions. Exchequer contributions to each account will be sent directly to the account manager and added to the savings in the account.

It will be possible for an individual to transfer a special savings incentive account from one investment manager to another during the five years.

Brian Walsh, chief executive of the Institute of Chartered Accountants in Ireland said that the new scheme will, if successful, take a lot of heat out of the economy. ‚€ėThe key to its success will be the extent of new savings which it will attract.‚€ô

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