NTMA Cut State Savings Rates (5 June 2016)

Massive cuts to most of the rates.

Deposit Account Plus is not listed on the new rate page. It seems this is no longer available for new customers.

Full details are not on the State Savings website yet nor is there a press release yet.

I will add grossed up comparison rates over the coming days.
 
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Arg. Is this effective immediately? It's getting beyond a joke at this stage now with all the reductions.
 
Press release below:

http://www.gordonmrm.ie/newsroom/cl...avings-products-and-changes-to-interest-rates

The National Treasury Management Agency (NTMA) has today announced:

a)new issues of its range of fixed-rate State Savings products – Savings Bonds, Savings Certificates, Instalment Savings, National Solidarity Bonds

b)a new variable interest rate in respect of the Deposit Accounts

c)a new variable interest rate used to calculate the prize fund for Prize Bonds


FIXED RATE PRODUCTS

  • Issue 17 of 3-year Savings Bond offering a 1% fixed-rate total return,AER1 0.33%
  • Issue 6 of 4-year National Solidarity Bond offering a 2% fixed-rate total return, AER 0.50%
Issue 22 of 5-year Savings Certificate offering a 5% fixed-rate total return, AER 0.98%

Issue 14 of 6-year Instalment Savings offering a 5½% fixed-rate total return, AER 0.98%2

Issue 6 of 10-year National Solidarity Bond offering a 16% fixed-rate total return, AER 1.50%

Note 1: AER is the Annual Equivalent Rate. The AER quoted assumes no early encashment.
Note 2: The AER on Instalment Savings assumes an average term of 5½ years based on a one-year contribution period followed by a five-year term.


Any money already placed in previous issues of fixed-rate products prior to Sunday 5 June 2016 will continue to receive, for their remaining term, the fixed rates applicable to each product on the day of purchase. Previous issues of these products are now closed to new purchases.

DEPOSIT ACCOUNTS

The new variable rate on the Deposit Account and Deposit Account Plus is 0.15% subject to Deposit Interest Retention Tax (DIRT).

PRIZE BONDS

From 1 July 2016 the variable rate used to calculate the monthly prize fund will be 0.85%.There is also a change to the prize structure. The new prize structure is as follows: the top weekly prize is €50,000 except in the last weekly draw of every calendar quarter i.e. March, June, September and December when the top prize will be €1 million. Each week there will 10 prizes of €1,000 and 10 prizes of €500 respectively. The remaining weekly prize fund will be awarded in €50 prizes.

The new issues and interest rates reflect changes across the retail savings market and the fall in the cost of borrowing by the State. However, the changes also maintain the balance of remaining competitive and providing good value for the holders of State Savings products.

All State Savings money is placed directly with the Government and repayment is a direct unconditional obligation of the Government.
 
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theresa1 said:
Any idea Ciaran why Deposit Account Plus has been closed?
Click to expand...

I would guess that part of the reason is that the NTMA do not want to pay for short term funding when the NTMA can get short term cash at negative rates from the market.
 
This has been coming for a long time, the surprise is that it didn't happen many months ago. There have been many posts on AAM about about how SS rates were out of line with bank deposit rates and sovereign bond yields.

A few weeks ago I cashed in my prize bonds (100k worth) and bought a 5.5 year savings cert so am pretty happy with that decision now.

Also, I was up to the max holding for issue 5 of the 10 year solidarity bond, now as we are on issue 6 I can start buying more 10 year bonds if I wish. Even though the rate has been reduced to 1.5% AER tax free, from a quick look at the fixed term deposit best buys, no bank fixed term deposit (short medium, or long term) offers anything close to 1.5% AER tax free.
 
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CiaranT said:
Charlie Weston in the Indo has published an article on the effect the changes have on Prize Bond holders.
Click to expand...
Charlie focuses on the reduction in the number of €1m prizes. But that's the good news about these changes -- it leaves more in the pot for €50 prizes which are the bread and butter of the investor.
 
Looking at the new rates,am I correct in saying that paying tax at 41% the BoI 3YEAR GROWTH PAYING 0.84%
is better than NTMA 3year which pays0.33%?
Thanks Ciaran for all your work on rates.
 
Yes, BOI is a better rate. The NTMA product is more flexible, though. You can redeem it at any time with seven days notice, forfeiting some (possibly most) of the interest. On or after the second anniversary the hit is not too bad.

+1 ... thanks Ciaran for the work, as always.
 
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