Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

924. To ask the Minister for Employment Affairs and Social Protection the cost to her Department of negative interest rates on deposits held; the details of same for agencies under her aegis; and if she will make a statement on the matter. [11736/18]

Regina Doherty (Meath East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Negative interest arises from the necessary application by the Central Bank of Ireland of the policies and decisions of the European Central Bank (ECB). The ECB imposed negative interest rates on certain overnight deposits held with the Central Bank with effect from June 2014. This included SIF overnight balances in respect of PRSI receipts collected by the Revenue Commissioners (RC) and lodged to SIF Investment account in the Central Bank. With effect from 1 November 2016 Bank of Ireland (BOI) also imposed negative interest but at a lesser rate than the Central Bank. During 2017 BOI has increased its rate of negative interest and it now matches the ECB rate of -0.4% on all overnight bank balances including current accounts.

Overnight balances are required to prefund bank accounts to meet the Departments expenditure as it falls due in the subsequent days. In addition the SIF is self -financing and must maintain adequate daily reserves for prudent treasury management. Vote treasury on the other hand is funded by the Pay Master General (PMG) and therefore incurs a lesser charge for negative interest.

Funds surplus to SIF treasury requirements are transferred to the National Treasury Management Agency (NTMA) via the Central Bank and do not incur negative interest.

In 2017 my Department was charged €1.725 million in negative interest in respect of moneys for which it is accountable; €1.603m relates to the Social Insurance Fund (SIF) and €122K relates to Vote 37 - Department of Employment Affairs and Social Protection. This charge relates to all of the Department’s bank accounts including current accounts.

The position for bodies under the aegis of the Department is set out in the following table: