Paudge Connolly (Cavan-Monaghan, Independent)
Link to this: Individually | In context

Question 292: To ask the Minister for Finance if he has given consideration to the effect on the economy of the release of funds from maturing SSIA accounts between 2006 and 2007; if he proposes to provide another savings vehicle for re-investment of SSIA savings; and if he will make a statement on the matter. [19120/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The SSIA scheme opened on 1 May 2001 and entry to it closed on 30 April 2002. The accounts are due to mature between May 2006 and April 2007. A total of 1.17 million accounts were opened during the period outlined.

The impact of maturing SSIA funds on the economy in 2006 and 2007 is subject to ongoing consideration within my Department. The impact on consumer demand is difficult to estimate and will depend on how the accumulated savings are spent or saved, how that portion of an individual's income that was previously saved in SSIAs is used, and the extent to which savings are rolled over into other investment products. The economic effect will also depend on the state of the economy in 2007, when the bulk of SSIA funds, or around 55%, mature. To date, a number of reports have been prepared regarding the impact of the SSIAs by, amongst others, Goodbody Stockbrokers, Lansdowne Market Research, the Irish Mortgage Corporation and the Bank of Ireland. However, there is no consensus in these reports as to how these funds may be used. It is inevitable that there will be a lot of uncertainty about the likely outcomes. As a scheme such as the SSIA has not existed previously, it is not possible to draw on experience as a basis for anticipating the impact the maturing accounts will have on the economy.

As regards a further scheme, the specific goal of the SSIA scheme was to encourage people to save over a period of at least five years. Its effect has been to stimulate such savings over varying income ranges which is evident in the extensive take-up by many low income earners. The scheme has been a success in those terms. The scheme has a specific duration. Any proposals for tax-based incentives for the re-investment of SSIA savings or continuation of savings would be considered as part of the normal annual budgetary process taking account of public policy objectives and Exchequer cost implications. The use to which the moneys arising on maturity of the SSIAs are put is ultimately a matter for the individual account holder.