The Government-sponsored savings scheme is unlikely to unleash a spending spree as many savers will opt to reinvest their windfall in pensions, according to a Bank of Ireland survey published today.
The survey reveals that 83 per cent of SSIA customers intend reinvesting some or all of their monies and if a tax incentive were introduced to transfer all or part of their SSIA funds into a pension fund, 51 per cent would be likely to do so.
The scheme, in which the Government contributes €1 for every €4 of savings, is the brainchild of former finance minister Mr Charlie McCreevy and is expected to fuel a consumer boom to coincide with the next general election.
However, based on Bank of Ireland's 272,000 SSIA accounts, only 35 per cent will mature in 2006. The remainder will mature in 2007, 60 per cent doing so in the last three months of the scheme.
The survey found that 76 per cent of SSIA customers were first-time savers, 24 per cent of whom were between 25-34 years of age and 22 per cent of this group were over 55.
Bank of Ireland said 79 per cent of first time savers opted for a deposit SSIA and 21 per cent for the equity product.
Not surprisingly given the free money on offer, 94 per cent were satisfied with the returns to date and 90 per cent stating that they would choose the same product again.
Customers with equity products are likely to be rewarded for the extra risk with the bounce-back in markets having a positive effect on returns to date, positioning this product as the likely top performer on maturity.
Mr Brian Forrester of Bank of Ireland said the survey demonstrates the case for a tax incentive for people to transfer all or part of their SSIA funds into a pension and jump start pensions funding from its current low level.
Surprisingly, 53 per cent of SSIA customers were not contributing the maximum €254 per month. The average amount saved per month is €171.14.
The research also revealed what was top of the shopping lists for those who intend to spend some or all of their savings. Car purchase topped the list at 23 per cent, closely followed by home improvements at 21 per cent and holidays at 19 per cent.