The State has increased the interest rates applied to State Savings products such as prize bonds and deposit accounts.
State Savings is the brand name used to describe the range of Government savings products offered by the NTMA to personal savers through An Post. It offers variable-rate and fixed-term fixed-rate savings products, prize bonds, and deposit accounts.
State Savings has no fees or transaction charges when lodgements and withdrawals are made, and its fixed term products are tax-free.
‘We are in unchartered waters on health insurance pricing’
In a statement on Friday, the National Treasury Management Agency (NTMA)said the total tax-free return on the new fixed rate products on a three-year savings bond will increase from 1 per cent to 4 per cent.
Parties’ general election manifestos struggle to make the figures add up
On his return to Web Summit, the often outspoken chief executive Paddy Cosgrave is now an epitome of caution
Surviving a shake-up: is restructuring ever good for staff?
The Irish Times Business Person of the Month: Dalton Philips, Greencore
The tax-free return on a five-year savings certificate will increase from 5 per cent to 9 per cent, while it will increase from 5.5 per cent to 10 per cent on six-year instalment savings. The rate offered on a 10-year national solidarity bond will increase from 16 per cent to 22 per cent.
The variable rate that applies to the deposit account will increase from 0.05 per cent to 0.75 per cent.
NTMA director of funding and debt management Dave McEvoy said the move in interest rates was designed to “seek a balance” between providing customers with a savings option and providing “long-term value” to the exchequer as it manages the cost of borrowing.
The agency also said it would treble the prize bond fund on offer to €48 million. The variable rate used to calculate the total prize fund is increasing from 0.35 per cent to 1 per cent of the total value of prize bonds outstanding.
The increased prize fund will deliver a top monthly prize of €500,000 in the last weekly draw of every calendar month, double the €250,0000 previously on offer.
Weekly €50,000 prize
There will be a top weekly prize of €50,000 in every weekly draw. Each week there will be 20 prizes of €1,000 and 20 prizes of €500 respectively, compared to 10 prizes of €1,000 and 10 prizes of €500 currently.
The remaining weekly prize fund will be awarded in €75 prizes, which is an increase in the previous minimum prize of €50. Overall, the number of prizes is expected to double to half a million annually.
There were net inflows of €700 million into State Savings products last year compared to €1.3 billion in 2021. The total value of State Savings holdings was €24.9 billion at end-July 2023, the NTMA said. That includes deposit accounts and forms over 10 per cent of the national debt.
Minister for Finance Michael McGrath said the move by the NTMA would provide State Savings customers with an increased return on all new fixed-term savings and deposit accounts.
“It has been widely discussed that the interest rate environment has changed significantly over the last 12-18 months, and I welcome today’s announcement by the NTMA to increase rates,” he said.
He added the move would support “the valuable conduit” that State Savings provides for the State to raise funding.
