Rite and Reason:Why has the State not responded to a modest "SSIA Lite" proposal which would enable thousands to escape moneylenders, asks Frank Shouldice
If you were to believe half the hype that's going around at present the greatest difficulty facing most of us this year will be finding ways to squander our SSIA money, despite recent stock market fluctuations.
More than one million people opened SSIA accounts. For every €4 you saved over five years the Government gave you an additional euro. Publicised as an idiot-proof tax-sensitive election-conscious giveaway, the inference is that anyone who passed up an opportunity like this had a serious problem associating gift horses with open mouths.
Yet despite the perception of wholesale largesse only 38 per cent of adults participated in the SSIA scheme. A strong but usually overlooked explanation why so many missed out is because even in this time of relative affluence many Irish people are poor.
The scheme itself was logic rather than genius. Economists contend it acted as a brake on inflation by promoting saving among spenders. If you had cash to spare the reward for putting aside a few euro every week was a generous bonus at the end.
Hence our dilemma whether to spend that windfall - on average €13,800 per account - on a car, a holiday, home improvements or whatever else we managed to do without during five years of ersatz penury.
But like many financial services in Ireland, the SSIA jamboree was a highly selective party. You had to have money to save in the first place. For those who need to keep a close watch on every euro, the scheme was a spectator sport. If you were a lone parent receiving €185.80 per week in social welfare you would be spared any anxiety about exceeding the maximum SSIA monthly deposit of €254.
Two different worlds, yet the party swings along. The current hoopla about the giveaway is simply a reminder to hundreds of thousands that the party they weren't invited to remains a fond indulgence for those of us who wrote our own invitations.
It was in response to the scheme's pragmatic but exclusive design that St Vincent de Paul (with other agencies) proposed a savings scheme for those who most need it. It was a type of "SSIA Lite" into which low-income savers could deposit €1/€5 per week (€5/€25 per month) for a period of between six months and two years.
The return would be one-for-one, with the Government matching every euro saved up to a maximum of €600. It would provide beneficiaries with a decent return on modest savings. More crucially, it would enable low-income holders to establish a savings history, thereby gaining valuable access to credit.
The very same matter arose during December's Prime Time Investigates programme on personal debt. Some 10 per cent of Irish adults do not possess a bank account. An estimated 160,000 consumers depend on legal moneylenders for credit - paying APRs of up to 188 per cent - while a far greater number are paying even more astronomical interest rates to loan sharks.
Even credit unions are at something of an impasse. With reserves now in the region of €8 billion, this remarkable communitarian movement has amassed enough financial muscle to become a significant player in the institutional markets.
In the short-term, however, tens of thousands of Irish people on low incomes feel no closer to the credit union than they did to an SSIA. Few among the poor have money to save, many are habitual borrowers from legal and illegal moneylenders and most consider themselves outsiders to any form of institutional credit.
Literacy is another key issue. The Money Advice and Budgeting Services (Mabs) agency does fine work in the area, but spreading financial literacy needs urgent attention.
For the past few years St Vincent de Paul, Mabs and the Combat Poverty Agency have pressed Minister for Finance Brian Cowen on the "SSIA Lite" scheme. They hoped financial exclusion would be addressed in December's budget.
It never happened.
The idea has been costed at just €6 million, the bargain of a lifetime. It would take thousands out of the abyss of moneylending and offer long-term benefits to everybody except those who profit handsomely by squeezing the poor.
In contrast, the much-feted SSIA scheme cost the exchequer a strikingly less modest €2.5 billion. For this price, 38 per cent of Irish adults are having a good time. Of the remaining 62 per cent some just missed the boat. Others, including those who couldn't afford to sign up in the first place, might well conclude they just don't count.
Frank Shouldice produced/directed the Prime Time Investigates programme Til Debt Do Us Part