‘Children’s savings scheme costs too much’

A SCHEME encouraging children to save costs €1 million a year to run even though it only brings in €4m annually, the financial watchdog warned.

The Comptroller and Auditor General (C&AG) insisted a cheaper system must be put in place for the bank stamps initiative.

An Post is paid a management fee of €1m a year to run the scheme even though there is usually only €2m on deposit at any time.

The National Treasury Management Agency has repeatedly called for the initiative to be abolished.

However, successive finance ministers have refused the advice, saying it was important to get children into the habit of saving.

The scheme sees children buy stamps, in schools or at the post office, with a total value of €4m to €4.5m a year which ends up in the Post Office Savings Bank.

“The average sales were so low the question arose as to how the outlay could be justified and whether any action had been taken,” the C&AG said. The auditor was told by the scheme’s management it was not seen as a fundraising vehicle, but as an educational tool to encourage youngsters to save.

However, the agency admitted the costs of the initiative were “disproportionate to its benefits”.

A new scheme is being finalised after years of concern at how the current one operates.

The C&AG welcomed plans to reform the system.

“While recognising the argument that the savings habit should be encouraged, a move to a less costly administrative mechanism is desirable,” the report states.