The average Irish household does not have €95,000 on deposit

Brendan Burgess

Brendan Burgess

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This is a widely quoted figure and is one of the reasons for Simon Harris proposing something to help get that money active.

Barra Roantree in Trinity has a newsletter which deals with this.

howtotaxandspendit.substack.com

The "squeezed middle", savings and tax breaks

Is there anything to be said for another tax break?
howtotaxandspendit.substack.com howtotaxandspendit.substack.com

I found this exasperating, firstly, because the Tánaiste tried to justify the idea as aimed at helping “the squeezed middle who are putting money in the post office or the credit union”, pointing to an astonishing “€170 billion euro on deposit in Ireland”.

This refers to frequently cited Central Bank figures on the amount held by households as deposits in Irish resident credit institutions, of which ~€74 billion is in current accounts (see Table A.11.1 here). Given there are about 1.8 million households in Ireland, that equates to an average of almost €95,000 in deposits - and €41,000 in current accounts - per household.

If that sounds implausibly high it’s because it is. As this guidance note outlines, what the Central Bank refer to as households here also includes “sole proprietorships and partnerships without independent legal status” as well as “Non-profit institutions serving households (NPISHs)”. This latter group contains “sports clubs, unions, churches, charities helping the poor and similar bodies”. So don’t worry, your family is not some atypical example of profligacy if you don’t have €40k sitting in your current account.

What do households - as more colloquially defined - actually hold in savings? The best data we have on this comes from the ECB led Household Finance and Consumption Survey (HFCS). CSO analysis of this survey suggests that in 2023, 98% of households held some money in either a current or a savings accounts with a median value of €8,700 (down from €9,700 in 2020).
 
He uses a household "survey" of deposits and current accounts held to say that most people in Ireland do not hold large amounts in deposit accounts, "surveys" are BS because people always lie in them especially in Ireland where nobody would admit in a survey that they hold 100K or more in a deposit account. The only reliable information is hard data on deposits from central bank not a consumer survey.
Of course Barra Roantree is from trinity so obviously will come at everything from a left wing perspective. So it looks like the left and hard left in Ireland are going to kick up a big fuss about this. Also I bet some of those state quangos will also be coming in to throw sand in the gears in reforming Irelands outdated and highly taxed savings and investment sector.
 
I would suggest Brendan from my own informal (admittedly non methodical or scientific) experience that, aligned with the considerable proportion of the population just scraping by living from one paycheck or welfare check to next, there are a good chunk within the "squeezed middle class" who have savings in the €50-100k bracket (just evidenced alone by the amount of money makeovers on here asking what to do with a €100k lump sum and those that finished paying off mortgages and weren't entirely sure what to do with the extra disposable income after that!

There are also a considerable proportion of the elderly population, particularly in rural Ireland, who have considerably larger sums on deposit (in the €100's of k's), not to mention entirely aside, the cash "under the mattress" as a form of security, as this is the only form of security many of them can relate to. Frequently many of them will have no health insurance or private pension or indeed some may even not have effective central heating or insulation in their houses (and those in agriculture may have much more impressive farm buildings and machinery than their primary residence and car), but they have massive sums sitting in bank a/c's. I suggest that these serve to also skew the national average figures considerably.
 
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Brendan Burgess said:
98% of households held some money in either a current or a savings accounts with a median value of €8,700 (down from €9,700 in 2020).
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If these numbers are correct, perhaps the "squeezed middle class" should be encouraged to increase their savings with the type of scheme that are discussed.
 
I would also suggest, on the subject of savings in general, that savings, even minimal, are a lifeboat or a hope to cling on to, for those not happy with their current lot.

I'm reminded of my early working life in London, where my pittance of a salary seemed to barely cover rent, food and the Tube ticket and some w/e entertainment most weeks, and I could only dream of having sufficient funds to head for Oz like others, or undertake a round the world or Asian or South American adventure.

Yet, I still managed and persevered to put away some money in a savings account, partly probably just to preserve hope and have some sort of an "escape fund" when the opportunity arose. Ultimately, at the end of maybe three years, when the fund amounted to a relative miniscule £1k or so, the opportunity did arise and I expect having this comfort blanket there, however small it was, gave me the security and courage to make the leap
 
Office of National Statistics in UK said:
  • Median household financial wealth increased by £2,100 (25%), in real terms since the April 2018 to March 2020 period, to £10,400.
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Ok, it is another jurisdiction and it was over 5 years ago. "financial wealth" includes deposits, stocks and shares, ISAs etc. but excludes property and pensions wealth. Nonetheless a figure of €95k on deposit per household in Ireland must be grossly misleading.
 
But are households with less than 10k in deposits likely to move much of that into higher earning assets, even with tax incentives? Most people like to keep a safety net or "emergency fund" in cash/deposits regardless of return.

The people with money to activate are those comfortably above that safety threshold.
 
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As pointed out above money on deposit is only half the story. Lots of elderly in rural area keep substantial amounts in cash. They fear when they die or have to go into a nursing home the government will take all their bank savings to claw back all the social welfare payments they were not entitled to over the years or be forced to pay for their nursing home out of savings when they feel they would get it for free if they had no declared savings.
 
ClubMan said:
In such cases I certainly hope that the authorities do everything that they can to recoup fraudulently claimed welfare payments.
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Invariably its Non Contributory OAP that they would be claiming for years as they have 'No' savings. Often would be 2 or 3 in the house all claiming and all easily living off one pension. They would all live frugal lives....such a waste
 
merid said:
Invariably its Non Contributory OAP that they would be claiming for years as they have 'No' savings. Often would be 2 or 3 in the house all claiming and all easily living off one pension. They would all live frugal lives....such a waste
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I would concur.

Many of my own elderly relatives and their contemporaries would be in this category. So in that context I would disagree with the suggestion that the state should try to recoup these OAP payments which they have been fully entitled to (Dole/welfare payments for those claiming poverty are another thing entirely however).

It is somewhat tragic and pathetic to see the state claw back money for someone who has lived frugally and scrimped and saved all their lives so they could have that money for security in their old age, and invariably they rarely enjoy any of the comforts of life or get to spend it.

When they die the state claws a huge chunk of it back and the surviving relatives get to squander the residue, often completely oblivious to the deprivation and restraint and frugality that created it.

It almost makes a case for some of the OAP to be paid out in food vouchers or other forms that would induce spending rather than hoarding
 
Premos said:
They are not entitled to non contributory pensions if they are above the threshold.
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But it raises the moral question are they any less entitled to it to those that have squandered welfare all their lives and made absolutely no provision for their old age, expecting the state to continue to keep picking up the tab right to the end? Should one be penalised for being responsible, or albeit it foolishly living frugally, so as to provide into the future?

I'd know a whole lot of rural OAP's who manage to save a considerable chunk of their weekly pensions even without the additional fringe benefits accessible to their urban counterparts, such as free travel and it somewhat amazes me sometimes when I hear some pensioners crying poverty.

Then again I suppose it is all relative as to what one regards as essentials and luxuries. which would vary considerably between the country mouse and town mouse, whereby the urban dweller would probably regard a couple of foreign holidays, a couple of weekly trips to bingo and eating out at least once a week as essentials, a concept far beyond their rural counterparts. Whereas the cost of providing and running a reliable car for them
with minimal access to public transport is an essential.

Also, a good deal of them would be on contributory OAP's also, but I accept your point in theory on NC OAP's
 
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Mayo1969 said:
There are also a considerable proportion of the elderly population, particularly in rural Ireland, who have considerably larger sums on deposit (in the €100's of k's), not to mention entirely aside, the cash "under the mattress" as a form of security, as this is the only form of security many of them can relate to.
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this must be what you mean, mattress direct skit from savage eye.
 
It's likely that this forum might regret leaving out any reference to repealing the 1% Levy if there's a modicum of credibility in this paragraph from this article. Maybe if a levy applied to all savers it might have more meaning to the select consumers who favour one form of investment in the markets over another.

(I don't think David just made it up)

It is likely the Department of Finance would consider giving tax-free returns up to a certain point and gains beyond that would be subject to a new levy.
 
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