You might remember the Special Savings Incentive Accounts (SSIAs) that were introduced in Ireland back in 2001, where savers received €1 from the Irish government for every €4 they saved. They proved to be very popular among Irish savers with a total of 1.17m people opening SSIA accounts.
Interestingly, it was most popular among those on lower incomes with some 45% of those on an annual income of €20,000 or lower opening an account, and almost 40% of all account holders saved the maximum amount of €254 per month. For comparison purposes, Table 4 below, shows the SSIA equivalent top-up amounts that someone contributing 5% into their retirement savings account could potentially receive for every €4 they save, depending on the generosity of their employer and the top rate of income tax they pay.
So for someone contributing 5% who’s receiving a 10% contribution from their employer and paying the top rate of tax of 40%, they are in fact receiving €4 for every €1 saved, the exact opposite of the SSIAs where they would have only received €1 for every €4 saved! Another way of saying it is that they are getting a 400% return on their investment instantly before ever benefiting from any future tax-free investment growth. And yet, saving into retirement savings accounts hasn’t proven to be as popular as the SSIAs. At Fair Share Partners, we hope to change that.
| Employee Contribution % | Employer Contribution % | Top Income Tax Rate | SSIA-Equivalent Top-Up |
|---|---|---|---|
| 5% | 5% | 20% | €6.00 |
| 5% | 5% | 40% | €9.33 |
| 5% | 10% | 20% | €11.00 |
| 5% | 10% | 40% | €16.00 |