SSIA holders prepare to go on spending spree

SSIA holders are set to splurge on cars, home improvements and holidays, setting aside just 10% of their funds to repay debt, despite Ireland having one of the highest levels of personal debt in the Eurozone.

The low priority given to debt repayments exists despite recent warnings that proposed Central Bank interest rate rises will cause serious difficulties for many.

Yet Central Statistics Office (CSO) figures released yesterday show that SSIA holders are opting to spend their windfalls on cars, home improvements and foreign holidays.

SSIA holders said they will spend just under a third of their funds on consumer items. CSO figures gathered in the last quarter of 2005 also found around 46% of the money is expected to be committed to savings, pensions and investments.

A further 12% will be spent on other items.

The statistics gathered in the Quarterly National Household Survey found that two-thirds of SSIA account holders were making the maximum possible contribution at €254 a month to it in the fourth quarter of 2005.

The average monthly contribution stands at €217.04.

Around 73% of persons classified as professionals in the survey had an SSIA.

However, there are huge regional variations.

Around 40% of the population aged 21 and over in the Dublin and South East regions had an SSIA — just over 70% of them contributing the maximum.

In the border counties, that figure was just a third.

Around 47% of those in employment, a little over 23% of those who are not economically active, and almost 16% of the unemployed, had an SSIA.

The Government has been urging savers to cash in on pensions since the accounts first began to mature in June.

A new Pension Incentive Scheme was introduced in the 2006 Finance Act to encourage those on more modest incomes to continue the savings habit and place some or all of their SSIA proceeds into it.

The Exchequer will contribute a tax credit of €1 for every three euro invested, up to a maximum of €2,500, in an approved pension product along with a refund of a proportion of the tax deducted from the SSIA account at maturity.

To qualify for the scheme any investor’s gross income must not exceed €50,000 in the year prior to that in which the SSIA matures.