Light at the end of the tunnel but families still wait to feel benefits of economic upturn
Personal Finance Editor Charlie Weston on why the public had a mixed 2014 and faces more highs and lows on the money front this year
LAST year was one of mixed fortunes for consumers.
Unemployment levels fell all year, the economy began to pick up and consumer sentiment improved.
But few households felt the effects of this better economic news in their wallets and purses.
The hope now that the €1bn give-away Budget in October will feed through to some improvement in household finances in the coming year, and the lower water charges will not be a burden for those who are prepared to pay.
However, the country still faces major challenges before the majority of households can be confident that the worst in behind them.
It was a great year if you happen to be one of the lucky ones with a tracker mortgage.
Some 375,000 residential mortgage holders are in that lucky position, and an estimated 60,000 investor mortgage holders.
These people benefited from two cuts in the European Central Bank rate to a record low of just 0.05pc, as close to zero as rates are ever likely to go.
The interest rates on these home loans are directly linked to the ECB rate, which is at a record low of close to zero after two further cuts this year - in June and September.
The two cuts this year will mean annual savings of €240 in repayments on a €200,000 tracker mortgage over a full year.
The fall of the eurozone rate to just 0.05pc means that monthly payments on this mortgage are now around €665. Monthly repayments will have come down by around €140 since 2011.
Not so lucky are those with variable rate mortgages, unless they have their home loan with AIB or EBS.
AIB cut its variable rates by up to 0.25pc recently, but so far other banks have resisted moving their variable rates.
Some 320,000 homeowners are on variable rates, which are among the highest in the eurozone, with another 60,000 people are estimated to have buy-to-let mortgages on variable rates.
Variable rates in this country are around 2pc higher than in the rest of the eurozone, prompting MEP Brian Hayes to claim variable mortgage holders here are being "fleeced" by banks.
The Central Bank has been heavily criticised for putting out statistics that claim the mortgage rate for new lending is 3.35pc.
Governor Patrick Honohan admitted to TDs and senators that the new business rate is 4.51pc.
The pensions landscape has not improved much. The Government is still to give us a date for the introduction of a new auto-enrolment scheme to cater for the 900,000 who have no private pension.
Tanaiste and Minister for Social Protection, Joan Burton, who has responsibility for pensions policy, was criticised for failing to introduce most of the reforms recommended in a study her department commissioned from the OECD (Organisation for Economic Co-operation and Development).
Defined benefit pensions have continued to close, and cut benefits where they remain open.
Research by pensions consultants Mercer into 5,000 defined contribution schemes revealed that the average income of those with a defined-contribution scheme is set to be just 22pc of their current earnings.
The exceptions are the DB schemes in AIB and RTE. The broadcaster is State supported, while AIB got rid of its pensions deficit by shifting €1bn in assets off its balance sheet, and putting this money into its pension scheme.
This means that someone who retires earning €60,000 a year is likely to end up with €13,200 a year in retirement.
The study looked at the retirement plans for those in the 35 to 45 age bracket.
Public sector pensions remained untouched. There is now €1bn being paid out to public sector pensioners every year than is being collected by working public servants, effectively a subvention from general taxpayers.
Banks have continued to ratchet up current account charges for customers.
Ulster Bank changed its rules to make it more difficult avoid fees, while Bank of Ireland has again hiked fees that involve staff interaction in a branch, but cut fees for online banking.
Ulster Bank announced changes to its rules for current accounts which have seen an extra 50,000 people being hit with monthly charges for the first time.
Consumers have to keep €3,000 in their accounts at all times to escape fees.
The change comes just a year after the bank introduced fees, following the lead of Bank of Ireland and AIB which also require customers to keep credit balances in their current accounts to avoid charges and fees.
The cost for consumers of lodging a cheque in a Bank of Ireland branch is to shoot up from this year, while some fees for businesses are to jump by almost a third.
However, the bank is slashing the fees on electronic transactions for both personal and business customers.
The move is to encourage more electronic banking. This is the second time in just over a year the bank has adjusted its fees to make it more expensive to carry out paper-based transactions in a branch.
Calculations on Central Bank figures by Simon Moynihan of price comparison site Bonkers.ie show that since the beginning of the year €2.25bn has come out of savings accounts, and €2.27bn has gone into overnight accounts, which include current accounts to avoid fees.
He said this meant that people are moving huge amounts of money from deposit accounts into current accounts to escape paying current account fees.
Almost half a million people have no money left at the end of the month after they have forked out for bills.
So basically, all their income is being spent on trying to keep a roof over their heads.
These figures come from the 'What's Left' tracker from the Irish League of Credit Unions. This is a survey that was conducted to see how the finances of the public are holding up against the economic downturn and the increases in the cost of living over the past few months. Apparently only one-third of the population is able to save a small bit of money every month. But 560,000 adults have no disposable income left once the end of the month rolls around. 1.5 million only have a maximum of €150 left to spend.
The Budget was the first in years to deliver some good news. The top tax rate comes down to 40pc this month, two of the universal social charge rates have dropped, and the income tax bands have been widened.
And the rate of child benefit has risen by €5 per child.
The charges for water dominated news agendas all year. For much of the year the expectation was that a typical bank would be paying €280, with the first quarterly part of this bill due to fall through letter boxes this month. But massive protests saw the charges radically reduced. Families will now pay €160 a year, with €100 to come off that from an annual water conservation grant.
The prospect of yet another charge being imposed on households, even if it is now a modest one, has depressed consumer sentiment.
Many families and older people are operating on such tight budgets that a new bill is enough to floor them financially.
Credit unions spent the year working their way out of the financial squeeze. The forced closure of the Castletownbere CU was a low point.
Mergers continued to be encouraged by the State.
Close to 30 credit unions have come together in the last year to form 12 larger entities. Another 120 are looking at merging, to form stronger units.
The relentless rise in health insurance premiums continued for much of the year. But at least the Government stopped imposing new costs on health insurers, something which inevitably gets passed on to policy holders.
A number of cut-price plans were launched during the year, while the Government set a date of next May for new rules that will see those who hold off from taking up health insurance being hit with higher premiums.