Q&A

Dominic Coyle answers a selection of your questions

Finding the best home for savings

I invested €4,348 in savings certificates in 1993. The investment period was 10 years and was completed in December 2003. Since then, I left my investment on deposit with An Post. An Post states that the interest rates it quoted to me for leaving the money with it are better than rates on other new certificates. Should I continue to leave my investment as it is?

I opened an Special Savings Incentive Account (SSIA) in April 2002 and I put a small amount in every week. Should I put the money in the savings certs into the SSIA and, if so, should I put the maximum amount in each month?

Mr D., Galway

I am not sure exactly what you invested your money in initially in 1993. An Post savings certificates mature after five-and-a-half years while An Post savings bonds have a three-year term.

Even if you look at instalment savings at the post office, you are looking at a five-year term.

Of course, in 1993, other options may well have been available.

In any case, I think there is only one course of action for you at this stage and that is to invest in the SSIA.

Looking at the An Post website, the current issue of savings certificates is offering a return of 16 per cent over a five-and-a-half-year period - equivalent to about 2.74 per cent annually. This rate has been the same since the current 16th issue was opened in January 2002.

Compare that with the SSIA, where you get an immediate 25 per cent return on your investment simply from the Government contribution - before the money earns any other returns.

I know the An Post savings certificates are tax-free but there is still no comparison with the effective rate of return on SSIAs.

Obviously, you cannot put the €4,000 odd into the SSIA in one go but I would certainly encourage you strongly to put in the maximum monthly payment of €254 to maximise your return between now and the time your SSIA matures in April 2007.

With the amount you have in An Post, you should be able to pay the maximum amount monthly for most of that period - especially given you are already investing a small sum in the SSIA each month. Even if the An Post savings run out before the conclusion of the scheme, there is nothing to stop you lowering your payments again at that point.

Put simply, there is no better guaranteed investment than the SSIA scheme - the Government's €1 for every €4 paid in by you (effectively a 25 per cent interest payment) ensures that.

Double trouble

My son returned to Ireland last spring after working in London for about 15 years. He brought with him his Italian partner. Since then, he has obtained employment but she has not yet found a suitable job.

He is not allowed to claim a tax allowance for her even though he is fully supporting her. Apparently this is because they are not married.

However, when she applies for a social welfare allowance in her own right, she is informed that, because he is supporting her, she is not entitled to it. Is there any way around this very convenient and unjust anomaly?

M.S., Meath

This sounds like a classic Irish bureaucratic nightmare. As you point out, on the one hand the State is saying that your son's partner cannot receive State aid because he is supporting her and, on the other, he is denied tax relief because the system is skewed towards a particular view of such relationships. Quite simply, there has been no joined-up thinking in policy between the two relevant Government departments - the Revenue Commissioners and the Department of Social and Family Affairs.

It can only be a matter of time before the State is taken to the cleaners in the courts - either here or, more likely, in Europe - by someone over such an unjust situation.

I can certainly see the sense of the State refusing to pay social welfare to someone who is fully supported by a partner and, as such, has no real need.

However, if that is the ruling on that side, it seems churlish in the extreme to refuse your son a tax allowance in respect of that same partner simply because they do not follow some Catholic version of relationships as reflected in Irish legislation.

The situation your son and his partner have found themselves in is clearly discriminatory and it might be worth their while to contact the office of the Ombudsman.

Her office is designed to investigate complaints about administrative action or lack of it by Government departments. You can contact the office at 18 Lower Leeson Street in Dublin by mail, personal visit, e-mail (ombudsman@ombudsman.irlgov.ie) or by telephone (01-6785222).

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 10-16 D'Olier Street, Dublin 2 or by 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 questions. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.