SSIA savers plan to spend €2.3bn on home improvement

SSIA savers are planning to splash out billions of euro on home improvements, holidays, property and cars when their accounts start to mature from the end of this month.

The biggest amount of money — €2.3 billion — will be poured into home improvements, a far greater sum than the €550m savers plan to inject into their pensions despite incentives to do so announced by Finance Minister Brian Cowen.

A €1 billion splurge on holidays is predicted and investment in property at home and abroad is expected to soak up in the region of €1.2bn of SSIA funds.

Approximately one-in-six savers will spend €820m on cars.

Property investment will feature prominently with one in every nine account-holders planning to invest in Irish property.

A further 3% of the survey’s respondents said they plan to invest in overseas property.

But the survey also shows that a large number of SSIA-holders have been bitten by the savings bug and will continue to save or will invest in pensions or other long-term savings products. More than €1.75bn worth of SSIA funds may be rolled over, while some €1.2bn may be invested in other long-term savings products.

Speaking on RTÉ radio yesterday, Irish Life and Permanent head of marketing Brendan McEvoy said the money generated by the SSIA savings meant close to “€600m extra will be invested in pensions that might otherwise have not been invested”.

“And the Government has also recently announced attractive incentives for savers to transfer some of their SSIA savings into their pension plans,” Mr McEvoy added.

He said the reason more people were not putting their savings into pensions was because awareness of Government incentives is still quite low.

Of the 16% of account-holders who might consider non-pension long-term savings products, one-quarter of them said they might invest in shares or managed funds while 19% might invest in a property fund.

According to the research, half of all SSIA savers are now saving the maximum but the monthly savings average stands at €188.

More than half a million savers have no idea how to spend their windfalls.

The research, conducted by Behaviour and Attitudes for Irish Life, found two-thirds of those who keep on saving will put away the same amount or more than they saved in their SSIA.

Almost a quarter are considering investing some of their SSIA in pensions and other long-time savings products, the survey found.

The research showed that older people and working-class savers are more likely to spend their SSIAs, while more economically confident people are more likely to keep their savings intact.

The first SSIAs will mature this month, with the balance maturing over the next year, and the Irish Life survey of 1,200 adults is the first in a series of bi-monthly reports aimed at determining the plans and intentions of SSIA holders.

Up to €16bn is locked away in the accounts.