New research* conducted nationally by Hibernian Life & Pensions states that 84% of SSIA savers found that saving each month was not a burden to them, although this did not automatically mean that they were open to continuing saving once the government incentive had disappeared.
New SSIA survey:
- 84% say SSIA is not a financial burden
- but only 10% plan to reinvest all of savings
- Government’s pension target group least likely to reinvest
- managing director urges finance minister Brian Cowen to act
New research* conducted nationally by Hibernian Life & Pensions states that 84% of SSIA savers found that saving each month was not a burden to them, although this did not automatically mean that they were open to continuing saving once the government incentive had disappeared. The survey also indicates that lower income groups are least likely to reinvest their SSIA funds or to use them to start a pension without a clear incentive.
It is estimated that almost half of the €15 billion in SSIA savings will be blown on a variety of spending projects following the maturity of the SSIA accounts during the April 06 - April 07 period. Only 15% of those surveyed said they planned to reinvest a part of their savings, and only 10% planned to reinvest the whole sum.
Commenting on the results of the survey Tony O’Riordan, managing director, Hibernian Life & Pensions, said: "It appears that people view SSIA cash as a windfall payment, and that the majority of savers plan to spend, spend, spend! Worryingly however, is the indication that the government’s target pension group, those on lower incomes, are least likely to reinvest or to consider starting a pension with their SSIA lump sum".
"Spending the government’s 25% SSIA top-up is the piece of cream that everyone should enjoy. But the fact that 75% of savers have absolutely no plans to reinvest should be a warning note for the government. I would urge finance minister Brian Cowen to think seriously about encouraging people to continue putting something aside every month and to reconsider incentivising post-SSIA savings".
The average SSIA saving is currently €170 a month. This contrasts with an average of Ł119 (€151) when the scheme commenced in April 2001. Indicating that many people have been topping up their SSIA accounts over the last few years.
51% of those surveyed said that they would be open to doing something similar again, if the incentive was there.
Tony O’Riordan added: "Recent figures from the Central Bank have indicated that personal debt in this country is now €1.20 for every €1 of after tax income earned, compared to 48 cent to €1 ten years ago. I believe the real success of the SSIA scheme is that it persuaded over one million Irish people to save; particularly across low income and younger age groups."
"It seems pointless to abandon this achievement now. We therefore call on the government to capitalise on the success of the SSIA scheme and the numbers of people who would reconsider their spending plans if a new incentive existed. At the very least, we urge the government to consider reducing or deferring exit taxes for those who reinvest."
"Without a significant government initiative, it is difficult not to conclude that many people, and in particular those on lower incomes, will spend the lot. Or worse, pre-spend their lump sum and use the current average household SSIA expenditure of €340 a month to fund an even greater level of debt."
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Additional data:
- 46% said that their SSIA windfall had already been earmarked for home improvements, new cars or once-in-a-life-time holidays
- Home improvements topped the list of SSIA spending projects with 23% indicating that they planned to spend all or part of their windfall giving their home a facelift. (Perhaps the key message here is that if you want a builder book now!)
- 13% said a new car was their priority
- A further 13% proposed to spend their money on a dream holiday
- 12% plan to use their SSIA to help purchase a property
- But only 2% said they would consider using it to add to or start a pension
Press contact:
Kela O’Riordan, 01 617 8164, 086 606 8842, kela.oriordan@hibernian.ie
*Research carried out during January 2005 by Behaviour & Attitudes Ltd on behalf of Hibernian Life & Pensions. A syndicated approach to collecting information from a national sample of 1,200 adults was used. The sample was quota controlled in terms of gender, age, social class, region and area of residence to match the known demographics of the population.
Notes to editors:
- Hibernian is Ireland’s largest composite insurer, ranked first for general insurance and top three for life and pensions
- Hibernian is part of Aviva plc the world’s fifth largest insurance group
- A photograph of Tony O’Riordan is available by ISDN
- Hibernian news releases are also available on www.hibernian.ie