Q&A

Dominic Coyle answers your questions on  SSIAs, Mortgage deeds, andf Pensions.

SSIAs

Recently in the course of discussions with friends, it emerged that there was a variance of about one month in the date by which banks credited the Government contribution - i.e. one bank recorded the receipt in the SSIA account on the same date as the accountholder's contribution whereas another bank credited the account the following month.

Can you tell me what, if any, regulation covers the issue of the date of the Government contribution?

C.T.B., Limerick

You'd think that there would be one set date for crediting these contributions but apparently not. To be fair to the banks - and indeed other providers of the special savings incentive accounts (SSIAs) - the reason for the disparity in the dates is that some banks are being more competitive than they have to be.

The rules state that the Government contribution of €1 for every €4 put into the account by the SSIA customer can be credited as soon as the customer's contribution is made. However, it does not have to be credited at this stage.

The outside limit is when the tax credit is passed on to the financial institution, but I am told by the Department of Finance that this can be anything up to eight weeks after the time of the original customer's contribution.

As you can see, there is quite a range there within which banks can work.

From the point of view of the investor, the sooner the money is in your account, the sooner it is growing on your behalf. All other things being equal, investors would naturally veer towards transferring their SSIA to those institutions that credit the Government contribution at the same time as the customer makes their monthly payment.

Such transfers should cost you nothing in the case of deposit-based accounts although the situation is somewhat complicated in the case of equity-based accounts.

However, you will also need to take into account the difference in interest rates offered by the institutions on the accounts. In the current low interest rate environment, these will not be dramatic but there is still a degree of competition.

Mortgage deeds

I have just made my final mortgage repayment. The building society has said it will forward the deeds directly to me in due course. My question is: should I leave the deeds for safe-keeping with my bank or solicitor?

Mr P.C., e-mail

Yes, you should although there is no obligation on you to do so. While you owed the mortgage, the building society held onto the deeds because they are the proof of ownership and, as such, provided the society with the security that, in the event of your failing to pay your debt, they had possession of the legal title to the house.

That gives you an indication of the importance of the documents. Should you lose them, it would hugely complicate any future effort to sell the house or pass it on in any other manner.

As an important legal document, the deeds should be treated in the same way as similar items, such as your will. These are invariably left with a solicitor or bank for safe-keeping.

Banks will generally charge a nominal fee for holding such items securely and the costs are likely to be less than those levied by your solicitor unless you do sufficient business with them to justify them.

Pensions

The general public is always being warned of the need to set up a pension plan, but is it really essential to do this? Surely, if you're in a position whereby you only have enough money to save for a house or to invest in a pension, the property option is the only solution... Are we being misled over the need to have a pension?

Mr C.T., email

Is it essential to set up a pension plan? Yes, if at all possible. Are we being misled? No.

It's very simple. If you only have enough money to save towards the purchase of your first property, then you are looking forward to a very bleak retirement subsisting on the State pension - assuming that is not further devalued by the demographic changes that are creating what is called a pensions time bomb across Europe.

The importance of saving towards a pension comes to the fore as one gets older. The irony is that the best way to ease the problem of pension savings is to start early when people seem to have neither the inclination nor the money at their disposal.

The thing to remember is that you are essentially saving during a maximum 47-year working life for a retirement that could easily be half that length.

Putting together a pot of money that will fund those retirement years takes time.

If you are in a job that offers an occupational pension scheme, you should avail of it. Personal Retirement Savings Accounts (PRSAs) apart, they will involve a contribution from your employer. In other words, by not taking up an opportunity to save in an occupational scheme, you are effectively turning down part of your remuneration package.

Defined benefit occupational plans - where the amount you receive in a pension is defined by the number of years you work with the employer - are the most desirable of the occupational schemes, although they appear to be on the way out.

The other major advantage of pension savings are the tax breaks available. You will not pay tax on contributions to a pension scheme - yes, there are upside limits but these will certainly not affect anyone struggling to put anything aside.

What this means is that you will save 42 cent for every euro you put into a pension scheme, assuming your income drags you into the marginal tax rate.

If you genuinely have no money you can save apart from something to build up your mortgage deposit, there is a problem but it might be worth your while going through your income and outgoings to see if you cannot at least start a pension now and increase the payments as soon as you are in a position to do so.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.