Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by the National Treasury Management Agency (NTMA), that the NTMA constantly reviews rates, to ensure that products remain competitive in the savings market generally, whilst providing good value to the Exchequer in terms of borrowing costs. In setting the rates the NTMA is conscious and appreciative of the loyalty of State Savings customers and the importance of an appropriate reward rate.

The rationale for the increases in March 2023 reflected the changes in the interest rate environment. Since the last rate reduction in January 2021, the European interest rate environment changed as bond yields moved from negative to positive territory. In keeping with this, Irish 5 and 10 year sovereign bond yields were yielding negative rates in January 2021, compared to over 2.5% in March 2023.

The rate increases to 5 Year Savings Certificates, Instalment Savings and the 10 Year National Solidarity Bond were the first State Savings interest rate increases for approximately 15 years and focused on providing an increased return to savers on the medium to long-term product offering.

The key features of State Savings products remain:

• The repayment of all State Savings money is a direct, unconditional obligation of the Irish Government. Repayment of money includes principal, interest and bonus payments if due,
• Excluding the Post Office Savings Bank (POSB), Interest, Bonus payments and Prizes from State Savings products are not subject to Deposit Interest Retention Tax, are exempt from Income Tax, PRSI and USC.
• No fees, charges or commissions apply to holding State Savings products.

The NTMA continues to review rates offered on all products.