NTMA increases rates for State Savings products

[UnaMaria]

NTMA increases rates for State Savings products

• Rates on new fixed term products to increase. The total tax free return on the new fixed rate products are as follows:
  • 3-Year Savings Bond from 1.0% to 4.0%
  • 5-Year Savings Certificate from 5.0% to 9.0%
  • 6-Year Instalment Savings from 5.5% to 10%
  • 10-Year National Solidarity Bond from 16% to 22%
• 
  
• Variable rate on the Deposit account to increase from 0.05% to 0.75%
• For Prize Bonds, the prize fund will almost treble in size to c. €48m, with the variable rate on the prize fund increasing from 0.35% to 1.00%.

Friday, 1st September 2023

The National Treasury Management Agency (NTMA) is increasing the rates that apply to new fixed term and variable rate State Savings products and almost trebling the Prize Bond fund on offer to holders of Prize Bonds.

All new interest rate changes and new Prize Bond fund structure will be effective from the 1st October 2023.



Fixed term product changes

The change in the tax free total return and Annual Equivalent Rate (AER) for new fixed term products taken out on or after 1st October are:

• 3-Year Savings Bond from 1.0% to 4.0% (AER from 0.33% to 1.32%).
• 5-Year Savings Certificate from 5.0% to 9.0% (AER from 0.98% to 1.74%).
• 6-Year Instalment Savings from 5.5% to 10% (AER from 0.98% to 1.75%[1]).
• - 10-Year National Solidarity Bond from 16% to 22% (AER from 1.50% to 2.01%).

Deposit account rate changes

The variable rate that applies to the Deposit account will increase from 0.05% to 0.75% from 1st October. Deposit Interest Retention Tax (DIRT) applies to interest on these deposits.



Prize Bond changes

The variable rate used to calculate the total prize fund is increasing from 0.35% to 1.00% of the total value of Prize Bonds outstanding, effective from 1st October. The prize fund is almost trebling in size and prizes are tax free.

The increased prize fund will mean the new prize structure from the 1st October is as follows:

• A top monthly prize of €500,000, in the last weekly draw of every calendar month, versus the previous top monthly prize of €250,000, in the last weekly draw of every calendar quarter.
• 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 per annum.

Dave McEvoy, NTMA Director of Funding and Debt Management, said:

“In setting interest rates on State Savings, the NTMA seeks a balance between providing customers with a savings option and providing long-term value to the Exchequer in terms of managing the cost of borrowing.

Rates are subject to ongoing review and take account of a number of factors, which include the wider interest rate environment, the strength of the State’s fiscal and funding position, and competitive developments in the retail savings market.”

Other information

All previous issues of Savings Bonds, Savings Certificates, Instalment Savings, and the 10 Year National Solidarity Bond will close on 30th September 2023. New issues of these fixed rate products will come into effect from 1st October. The 4-Year National Solidarity Bond will cease with effect on 30th September 2023 and there will be no new issue.

The new fixed term rates will have no effect on existing product holders. Money which has already been placed in previous issues of these products before 1st October 2023 will continue to receive the fixed rates applicable when the product was purchased, for the remaining term.

The total value of State Savings holdings was €24.9 billion at end-July 2023.





Notes to editors

Fixed term interest rates
Term	Product	Existing Total Return​	Total Return effective 1 October 2023​	Existing AER[2]​	AER effective 1 October 2023[3]​
3 Year	Savings Bond	1.0%​	4.0%​	0.33%​	1.32%​
5 Year	Savings Certificates	5.0%​	9.0%​	0.98%​	1.74%​
6 Year	Instalment Savings	5.5%​	10.0%​	0.98%​	1.75%[4]​
10 Year	National Solidarity Bond	16%​	22%​	1.50%​	2.01%​
Variable interest rates
Product	Existing AER​	AER effective 1 October 2023​
Deposit Account	0.05%​	0.75%[5]​
Prize fund rate for Prize Bonds	0.35%​	1.00%​

State Savings Fixed Term Products and Prize Bonds are attractive tax free savings products. State Savings have no fees and that includes no transaction charges when someone lodges or withdraws their money.

The repayment of all State Savings money is a direct and unconditional obligation of the Government of Ireland. Funds saved in State Savings Fixed Term products and Prize Bonds are placed in the Central Fund of the Exchequer and are used to fund Government expenditure. They form part of the National Debt of Ireland.

This is a press release. It covers the main points of this ann

A relative is in year 3 of 5 year Saving Certs. Can they withdraw those and reinvest to avail of the better rates being paid now?
Thanks

 

[Freelance]

A relative is in year 3 of 5 year Saving Certs. Can they withdraw those and reinvest to avail of the better rates being paid now?
Thanks

Yes. Savings Certs can be cashed in at any time, there is no restriction.

 

[charlie007]

They can withdraw the funds giving a weeks notice I think.
They should of course calculate the interest + the interest in the new bond is greater than leaving it alone.

 

[Freelance]

They can withdraw the funds giving a weeks notice I think.

There is no notice period for cashing in State Savings products. The only notice/holding period stipulated for any State Savings product is the minimum 90 days holding for prize bonds, other than prize reinvestments.

 

[charlie007]

There is a 7 business days notice required, but that's hardly a deal breaker?!

'You may seek Early Redemption of a Product on giving 7 Business Days written notice to: State Savings, GPO, FREEPOST, Dublin 1, D01 F5P2 in such form as is required for such purpose.'

 

[Freelance]

Well you learn something every day. In all my dealings with them, including a good number of early redemptions, this has never been raised, which is most surprising given how awkward and disobliging they like to be.

In fact when I cashed in (early) six bonds on 8th Sept last year, (detailed in post #111 of this thread) the turnaround was as follows
2no. arrived in my bank account on 14th Sept (4 business days)
2no. arrived in my bank account on 19th Sept (7 business days)
2no. arrived in my bank account on 25th Sept (12 business days) - having hounded them.

There was no mention of giving 7 business days notice in relation to any of these. Nor was there any reason given for the significant variation which appeared to be entirely due to their sloppy and inconsistent procedures and poorly trained staff.

 

[messyleo]

Well you learn something every day. In all my dealings with them, including a good number of early redemptions, this has never been raised, which is most surprising given how awkward and disobliging they like to be.

TBF it is very clear in the terms and conditions

 

[Freelance]

My point is that State Savings don't appear to take any notice of it themselves, per my experience above where I received the funds in relation to two early encashments 4 business days after requesting it.