BoI to charge people for holding their pensions

BoI to charge people for holding their pensions

From September, Bank of Ireland will apply an interest rate of 0.65% on pensions. File Picture

People holding their pension with Bank of Ireland will soon be charged to do so.

For the first time, the bank is to begin imposing negative interest rates on cash held in pensions.

From September, Bank of Ireland will apply an interest rate of 0.65% on pension pots, meaning customers will be charged €65 a year for every €10,000.

The bank said: "European Central Bank interest rates have been negative since 2014. Since then banks have been subject to negative interest rates for holding funds overnight and market indications are that rates will remain low for some time.

"As a result, we have applied negative rates on deposits for large institutional and corporate customers since 2016. We recently wrote to 14 investment and pension trustee firms to inform them about a rate change to their accounts, which is reflective of the negative interest rate environment.

"The average amount held on deposit by investment and pension trustee firms is in excess of around €100m, therefore it is no longer sustainable for the Bank to continue with the current rate of interest.

"We provided 3 months’ advance notification of this rate change to our investment and pension trustee firm customers."

Ulster Bank has also not ruled out imposing similar rates in the future on cash held in current accounts.

The Ulster Bank Chief Executive, Jane Howard, said: "In terms of Ulster Bank, we did introduce negative rates earlier this year and we've introduced it for larger businesses with balances of over €1m.

"As I sit here today we have no plans to charge negative interest rates for our personal customers but given the way everything happens, like Covid, so unexpectedly, it is not something I can rule out forever."

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