New State Savings Rates

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4,927
Effective 24 January, the NTMA have reduced some of their State Savings rates.

Changes:
- 5 year rate is now 0.59% AER tax free.
- 6 year rate is now 0.63% AER tax free.
- 10 year rate is now 0.96% AER tax free.
- The Deposit Account now pays 0.05% AER gross.
- The Prize Bond fund is now 0.35%.

Rates are so low now the new NTMA rates still remain competitive.

State Savings rates are well above sovereign bond yields.

Surprised to see the NTMA make the announcement on a weekend that is not a long weekend as per what they normally do.
 

cbreeze

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Love to know what platform they make their announcements on - would it be Iris Oifiguil or a press release to media. I knew this was going to happen sometime, though.
 
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4,927
The announcement is made in the State Savings website, via press advertisements and via press releases.
 
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Freelance

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What does this mean for Prize Bonds?
The notional interest rate which is the basis for the prizes has dropped from .5% to .35%. The prize structure changed by the elimination of the 2x€1m prizes which are replaced with 4x€250k prizes. The number of €50 prizes will drop significantly.
 

Duke of Marmalade

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The notional interest rate which is the basis for the prizes has dropped from .5% to .35%. The prize structure changed by the elimination of the 2x€1m prizes which are replaced with 4x€250k prizes. The number of €50 prizes will drop significantly.
OMG Joe Duffy making this out to be an enormous scandal.
 

Duke of Marmalade

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Ah Jayz! Guy doesn't want to give his bank account details, What's he afraid of, receiving phantom transfers? Then we have a Cork lady extremely irate that when she wins they don't tell her which Prize Bond won :rolleyes:
 

Tony40

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They have also changed the early cash-in reduced rates on the ten year bond. It used to be that after 6 years, if you cashed a ten year bond out early it would be the equivalent return of a 5 year bond from the same starting point. I always thought this made the ten year bond more attractive than 2 x 5 year bonds running consecutively where it was likely that the second 5 year period would suffer a rate reduction (as it has done now).

After 8 years of the new bond you will receive the equivalent of a 5 year, so makes it less beneficial.
 

alwaysonit

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State Savings rates are well above sovereign bond yields.

I've always wondered why this is - I guess as only people with a PPS number can purchase them, and there is the 120k limit, it's a way to offer a higher rate to citizens and residents without the possibility of a huge foreign investment.

In other words, just a nice gesture to Irish people?
 

Timjoe

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Are the winnings, if any, on prize bonds taxable? As far as I remember, lotto winnings are not taxable. Just wondering.
 

NoRegretsCoyote

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I guess the justification is that the NTMA want more domestic holders of Irish sovereign debt. I think Ireland has a high percentage of foreign ownership of sovereign debt.

Exactly.

Ireland was locked out of private debt markets 2010-2012. Only the EU and IMF would lend.

Retail investors (state savings, prize bonds) grew a lot in this period and were a very useful source of state financing.

IMO they will never cut rates below zero on these products.
 

Duke of Marmalade

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I don’t think State Savings are seen as primarily a source of funding. Why have limits after all? State Savings provide NTMA with 8.6% of its funding requirement.
So I see it as essentially a social service. It also helps put manners on the retail deposit takers as otherwise they would have very soft funding from the large amounts of small savings, mainly in the hands of pensioners.
 

Duke of Marmalade

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Well for the second half of 2010 and all of 2011 it was 100% of NTMA funding when you exclude the EU and IMF;)
You are talking about new funding rather than the existing stock. My guess is that during that period State Savings were withdrawing funding from NTMA as people like Jill Kirby talked about the measly returns compared to 14% p.a. in the bond market.
My main point is that I don't think funding is a major reason that we have State Savings and indeed at the present time it is an expensive form of funding.
 

NoRegretsCoyote

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My main point is that I don't think funding is a major reason that we have State Savings

Of course it is! Think back to the 80s. We were issuing in Dutch Guilders in double-digit rates! Local retail savings were cheaper and more stable.



and indeed at the present time it is an expensive form of funding.

Indeed, but a bit like an investment strategy, diversification is good.
 
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