Are we / NTMA overpaying State Savings investors?

We, the taxpayer, obviously pay interest on Irish sovereign debt via taxation.

The government owned NTMA determine the rates that State Savings holders, who effectively are sovereign debt investors, obtain.

The NTMA have said that State Savings rates are adjusted to reflect sovereign yields and deposit rates.

Many will not want to see State Savings investors get lower rates. However, are we, the taxpayer, overpaying State Savings holders? and should the NTMA be more proactive with adjusting rates?

Just this week a lot was made about the rates that the IMF charge us for our debt, maybe the NTMA need to look at what we are paying State Savings holders too.

The NTMA State Savings rates certainly out of line with deposit rates and sovereign yields ...

• 10 Years Rates:
• The Irish 10 year sovereign yield is [broken link removed].
• 10 year deposit rates are 1.50% at the only 10 year product provider RaboDirect.
• The NTMA pay 10 year State Savings holders 2.66% tax free which is 4.20% or 4.45% grossed up equivalent.

• 2/3 Years Rates:
• The Irish 2 year sovereign yield is around 0.02%.
• 3 year deposit rates are 2.20% at Nationwide UK (Ireland) and lower elsewhere.
• The NTMA pay 3 year State Savings holders 1.32% tax free which is 2.21% or 2.37% grossed up equivalent.

Good point.

As bond yields have tumbled during 2014, and the ECB has cut twice, you might expect the NTMA to cut SS again.

Yes, I'm surprised that the current issues have lasted as long as they have. Filled my boots with the 10 year NSB last week

In an environment with low interest rates, low bond yields, low inflation, low retail deposit rates and 41% DIRT - a 2.66% AER net nominal return from the 10 year NSB looks decent. Of course in a few years' time, the environment could be very different but if it is you can get at the principal with short notice.

I haven't seen anything in the media about a SS rate cut - as we know from past experience, before a cut there will usually be media articles about how good the SS rates are and how the banks are lobbying for them to be reduced.

After budget 2015 is DIRT at 41% now higher than income tax rate of 40%?

Was DIRT cut to 40%? I don't think it was but the 41% rate was chosen to match income tax rate.

savings bonds repay

I have both a national instalment savings and a savings bond due to mature on 1st Nov.
Today 31st Oct I received the notification inviting me to apply for repayment or re invest.
In the event of repayment it will be at least 3 or 4 weeks before I have use of my funds, while the state has use of these interest free.

Most other institutions give at least a months notice of such events, meaning the funds are available on the date of maturity.

Is this fair.