Reaping your SSIA dividend

It's coming up to that time when Irish people will start cashing in on the greatest Government giveaway in living memory. Beginning in May people's Special Savings Investment Accounts (SSIAs) will start reaching maturity. This will mean windfalls of anything between a few thousand euro and more than €20,000 for most account holders. The most frequently asked questions by account holders at present are how much their account will be worth and how do they get their money.

The value of an SSIA depends on how much was deposited over the five years and what type of account it is – a deposit or equity or other investment type of SSIA. The following tables give estimates for the value of deposit and equity based SSIAs on maturity for various rates of contribution.

Monthly contribution    Value at maturity

Deposit based (assuming an average interest rate of 2%)

€100                                    €7,962
€150                                    €11,943
€200                                    €15,924
€254                                    €20,223

Equity based (assuming an average annual return of 6%)

€100                                    €8,844
€150                                    €13,266
€200                                    €17,688
€254                                    €22,464

These figures only give a guide to what a SSIA may be worth. Many savers will have enjoyed higher interest rates and some savers will have benefited greatly from the recent upsurge in the stock markets depending on the type of equity account they chose.

This will not, however, be the actual amount you get. A tax of 23% is payable on the profits made on the account over the five years. These profits are the interest or equity investment gain and do not include the capital invested or the Government contribution of 25% of the amount saved each month.

For example, a saver who paid in the maximum €254 each month would accumulate €19,050 in their account over the five year term when the Government contribution is added. If they had invested in an equity based product which is worth €22,464 on maturity they will be liable for tax on the difference between the two amounts. In this case €3,414. The tax payable will be €785.22. This will be deducted automatically by the SSIA provider and paid directly to the Revenue. In this case the actual final value of the account will be €21,678.78. Not a bad return at all when it is considered that the amount saved over the five years was €15,240.

Getting your hands on the money should be a relativelystraightforward process. SSIA providers are required by law to send account holders a SSIA4 declaration form within three months of the account maturing. This must be completed by account holders and returned before the account matures.

You will be asked on the form to confirm that at all times from date on when SSIA started until the date the declaration is made, the following:

• you were the beneficial owner of the assets in the SSIA
• you only had one SSIA
• you were resident or ordinarily resident in the State
• you subscribed to your SSIA from funds available to you or your spouse without recourse to borrowings, or the deferral of repayment (whether of capital or interest) of sums borrowed when the SSIA started, and
• you did not assign or otherwise pledge SSIA assets as security for a loan.

St. Patrick's Credit Union (ESB Staff) Ltd.

St. Patrick's Credit Union operates a Budget Account which is available to all our members. The Budget Account enables members to spread the cost of their regular household bills over a 12-month period, and thereby avoid financial discomfort at certain times of the year.

It operates as follows: at the beginning of their Budget Year, the member estimates the total outgoings for the year and has this amount deducted on a weekly/monthly basis from their salary. This is paid into their Budget Account from which the bills are paid. For example, if a member estimates a total of €5,000 in outgoings for the year, then an amount of €96 per week or €417 per month would be deducted from salary and paid into the Budget Account.

The outgoings that are catered for are mortgage payments, house insurance, electricity, telephone, gas, car insurance, car tax, school fees, TV licence, TV aerial and 2 optional annual items. A member may include some or all of the above items. Mortgages are paid each month/quarter/half-yearly without further instructions. Electricity, gas and telephone can also be set up for automatic payment. A cheque for car insurance will issue automatically 2 weeks prior to the due date as supplied on the Budget Account application form. For all other items the member sends the bill to the Credit Union where they are paid within 1 week of receipt of same.

For further information and application forms, please contact Niall/Kathleen/Valerie on 01-6325100 or extn. 35100.