Public servants' €600m lump sum to fuel savings boom
Published 08/02/2012 | 05:00
THERE has been a surge in the number of people saving in banks and credit unions.
And the number squirrelling away money is likely to jump again, as banks gear up to pounce on a payout of more than €600m in lump sums to public servants who are retiring this month.
Almost half of Irish people have got enough spare cash to allow them to save regularly, a new survey shows.
The number of people saving on a regular basis was up 8pc in January, according to the Nationwide UK (Ireland)/ ESRI savings index.
The percentage of people not saving fell by 6pc to 31pc in January compared with December.
Savers were also more positive about the current environment for keeping their cash, with more than one-third saying it was a good time to save.
The most recent statistics from the Central Bank show that households have €91.3bn in savings in banks, after they salted away an extra €540m in bank accounts in December compared with the previous month.
This figure is expected to surge by the end of this month when an estimated €630m from the payment of tax-free lump sums to retiring public servants is handed out.
Some 8,000 public servants are set to retire at the end of this month as part of the government's plan to cut the numbers in the public service.
Jerry Moriarty of the Irish Association Pension Funds estimates that the average lump sum will be close to €80,000.
Senior people retiring are set to get even more, with retiring high-ranking gardai in line for lump sums of an average of €107,000.
Financial advisers warned savers yesterday that banks were monitoring their customers' accounts and anyone getting a large amount of cash would be targeted for product sales attempts.
Karl Deeter of Advisors.ie said: "Banks will monitor lump sums coming into accounts and will try to sell bank products like life assurance and investment products loaded up with fees for the bank to anyone coming into a large sum of money."
He advised anyone with a lump sum to get independent financial advice before taking the advice of a bank. Savings rates continue to be attractive, he said.
Depositors are being offered interest rates of up to 4.1pc by EBS for those prepared to put money away monthly, while lump sums can attract rates as high as an annualised 4.52pc for money deposited in an Investec fixed-term account.
An Post pays an annualised rate of 3.29pc for the four-year savings bonds, with no deposit interest-retention tax deducted.