Interest paid on State Savings products set to rise

The National Treasury Management Agency (NTMA) also announced that the Prize Bond fund is to increase further by 1.5 times its current level with effect from September 1. File photo: Sam Boal/Collins Photos

The National Treasury Management Agency (NTMA) has announced increases to the interest rates paid on new State Savings products with the value of the Prize Bond fund also set to increase.

From August 30, the three-year Savings Bond annual equivalent rate (AER) paid increases by 0.64% to 1.96%, the five-year Savings Certificate AER goes up by 0.55% to 2.29%, and the six-year Instalment Savings AER rises by 0.58% to 2.33%.

The 10-year National Solidarity Bond AER increases by 0.65% to 2.66%.

This means over the lifetime of the three-year Savings Bond savers can expect a return of 6%, a return of 12% for the five-year Savings Certificate, for the six-year Instalment Savings the return rises to 13.5%, while the return for the 10-year National Solidarity Bond increases to 30%.

Returns earned on these products are tax free.

The NTMA also announced that the Prize Bond fund is to increase further by 1.5 times its current level with effect from September 1.

Based on the current level of prize bonds outstanding, 10,000 prizes are expected to be awarded every week. A top monthly prize of €500,000 remains in the last weekly draw of every calendar month.

The top prize in every weekly draw is being doubled from €50,000 to €100,000. Each week there will be 50 prizes of €1,000, in place of the current 20 prizes of €1,000 and 20 prizes of €500.

The remaining weekly prize fund will be awarded in €100 prizes, which is an increase on the current prize of €75. Prize bond winnings are also tax free.

NTMA’s director of funding and debt management Dave McEvoy said in setting rates on Ireland State Savings, the NTMA “seeks a balance between providing customers with a safe and competitive savings option and providing long-term value to the Exchequer in terms of managing the cost of borrowing”. 

The NTMA is increasing the variable rate on Post Office Savings Bank (POSB) deposit accounts from August 30 by 0.5% to 1.25%. DIRT (Deposit Interest Retention Tax) applies to interest on these deposits.

Finance minister Simon Harris welcomed the various rate increases saying they will “provide Ireland State Savings customers with an increased return on new fixed-term savings products and deposit accounts”.