Terence Flanagan (Dublin North East, Independent)
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341. To ask the Minister for Finance the reason banks have been allowed to apply pressure to ensure that post offices and credit unions keep their savings rates low; and if he will make a statement on the matter. [42131/14]

Michael Noonan (Limerick City, Fine Gael)
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State Savings is the brand name used by the National Treasury Management Agency (NTMA) to describe the range of Government savings products offered by the NTMA to personal savers. All State Savings money form part of the sovereign debt of Ireland, the repayment of which is a direct, unconditional obligation of the State.

The position is that it is the Government's objective to raise money to fund the Exchequer at the lowest cost to the taxpayer while remaining competitive in the prevailing market conditions. The newly announced reductions in interest rates represent a saving to the Exchequer in the cost of servicing the National Debt and a benefit to the overall public finances. These new interest rates announced by the NTMA in October 2014 reflect the reductions in interest rates in the savings market and in sovereign bond yields generally.

The NTMA keeps the suite of State Savings products and the interest rates paid on them under constant review to ensure that the products remain competitive and attractive to retail investors, while balancing the funding requirements and not incurring interest costs above the levels generally prevailing in the market on Government borrowings.

Credit unions are not for profit entities that exist to attain the economic and social goals of the individuals that make up their membership and the wider local communities. Members' savings are eligible for an annual dividend payment which is paid out of a credit union's surplus funds. As such, each credit union is responsible for setting the dividend rate in line with its own level of surplus funds.