Ireland State Savings explained

If you’re looking for a safe place to put your money, then Ireland State Savings could be worth considering.

Offered by the National Treasury Management Agency (NTMA) on behalf of the Irish Government, these savings products provide secure, tax-free returns and have long been a popular option for savers who value security and stability over chasing big gains.

In this guide, we take a look at how Ireland State Savings work, the options available, and the pros and cons of each so you can decide if they’re a good fit for your savings needs.

What are Ireland State Savings?

Ireland State Savings are secure savings products offered by the Irish Government to the public which are managed by the National Treasury Management Agency (NTMA). The NTMA is a State agency responsible for managing the country's debt.

When you invest in one of these products you're essentially lending money to the Irish Government. Your savings will form part of the national debt and be used by the NTMA to manage the country's finances. So investing in the products helps contribute to the financial stability of the country.

As you're lending to the Government, your money is fully protected and guaranteed by the Irish State, offering an unparalleled level of security. You also don’t pay any tax on the interest you earn.

A look at the savings products offered

Ireland State Savings provides a variety of products, each designed with different saving goals and timeframes in mind. 

Fixed-term savings products

These products offer a fixed return over a specific period, making them ideal for those who like to know exactly what they’ll get back.

You can invest from as little as €50 up to €120,000 per person per product and fixed terms of three, five and 10 years are currently available.

The interest is compounded annually and paid out at the end of the term. 

While the rates may not always match what some banks or investment platforms offer, any interest you earn is tax-free and the 100% State guarantee offers a level of peace of mind that’s hard to beat.

*total tax-free return after the end of the fixed-rate term.

Regular savings products

With these products, you save a fixed regular amount for one year. Then at the end of the year, your accumulated savings are reinvested into a fixed-term account for another five years. 

You can save a minimum of €25 up to a maximum of €1,000 per month over the first year. And any interest you earn will be paid out tax-free.

Prize Bonds

Prize Bonds offer a different approach to saving.

Instead of earning a fixed interest rate, when you buy a Prize Bond your money is pooled into a fund, and a portion of this fund (currently 1%) is allocated as prize money for tax-free cash prizes.

There's a weekly draw offering prizes from €75 up to €50,000. And there's a separate monthly draw for a top prize of €500,000.

While there's no guaranteed return, the potential to win a significant tax-free prize can be a key attraction for many savers. 

Bonds cost just €6.25 each — though you must purchase a minimum of four bonds i.e. €25.

Your original investment is always secure. You must hold the bonds for a minimum of 90 days, but after that they can be cashed in at any time if you want access to your money.

However you won’t earn any interest on your bonds so inflation will gradually eat away at the real value of your money over time — unless you win one of the draws of course. Because of this, Prize Bonds aren’t considered a wise place to put all your savings. But many people find buying them a bit of "fun" and enjoy the excitement of the regular draw and the chance of winning something. It’s a bit like buying a Lotto ticket, but with your money still refundable if you don't win!

But as with the Lotto, the odds of winning big are extremely low. Indeed, with over 700 million bonds in issue, you actually have a greater chance of winning the Lotto than you have at winning big with a Prize Bond. Though at least you can always get your money back.

How can I purchase a State Savings product?

To invest in either a Prize Bond or a fixed or regular savings product, you must first register to become a State Savings customer.

You can access the application form here or get one in your local Post Office. You'll need to provide proof of address and ID. 

Your completed form can then be presented at any Post Office or sent to: Ireland State Savings, FREEPOST, Dublin 1, D01 F5P2 with the required documentation.

Once registered, you can invest in a product:

• Online at statesavings.ie

• At any Post Office

How can I access the money in my State Savings?

The process for encashment (taking your money out) is relatively simple. 

For Prize Bonds, you cash them in at any time after 90 days, though it may take a few days for the funds to be transferred back into your account. Remember though that you'll only get back what you originally paid for your bonds as no interest is paid. 

For fixed-term products, you’ll receive your total return (original investment and interest) at the end of the term. However, unlike fixed accounts with most banks, you can actually cash in your investment early by giving seven days' notice — you’ll just forgo any future interest due.  

The advantages and disadvantages of Ireland State Savings

Like any financial product, Ireland State Savings come with their own set of benefits and considerations.

Pros of investing in Ireland State Savings

• Unrivalled security: The most significant advantage is the 100% State Guarantee by the Irish Government. This means your money is completely safe, making them one of the most secure savings options available in Ireland.
• Tax efficiency: The interest you earn is entirely tax-free, which can boost your total return, especially over longer terms. Prize Bond winnings are also tax-free.
• No fees or commissions: There are no opaque management fees, transaction charges, or sales commissions associated with buying or holding State Savings products, ensuring that your full investment works for you.
• Simplicity: The process of buying and managing State Savings is straightforward. They’re available through your local Post Office network or online, making them easily accessible to customers both young and old.
• Accessibility: It's easy to get your money back. Unlike fixed products with most banks, you can don't have to wait until the end of the term to get access to your money. And Prize Bonds can be redeemed at pretty much any time.
• Predictable returns: For fixed-term products, you know exactly what your return will be over the term, offering certainty in your financial planning.
• Supports the Irish State: By investing in State Savings, you’re directly contributing to the funding of public services and the management of the national debt.

Cons of investing in Ireland State Savings

• Potentially lower interest rates: Compared to some higher-risk investments or deposit accounts offered by banks, the interest rates on fixed-term State Savings products can be a lot lower. This is often the trade-off for the unparalleled security.
• Inflation risk: In periods of high or even moderate inflation, the returns on offer are unlikely to keep pace with the rising cost of living, meaning the purchasing power of your savings could diminish over time.
• No guaranteed return on Prize Bonds: While the allure of a big win is tempting, there's no guarantee you'll ever win a prize with Prize Bonds, and therefore no guaranteed return on your money beyond the return of your original capital.

Is Ireland State Savings right for you?

Ireland State Savings may not be the flashiest of savings options, but for some people they tick many of the right boxes: secure, straightforward, and tax-free.

The products are particularly well-suited for savers who:

• Prioritise the absolute security of their money
• Are looking for a simple and straightforward savings solution
• Appreciate tax-free interest 
• Enjoy the chance to win prizes without risking their savings (Prize Bonds)

However the returns on offer may barely keep up with inflation in some cases. So while it's a safe place for your money, you'll often be able to find a better return for your savings elsewhere, even after paying tax.   

Compare your options

If you don't want to invest with Ireland State Savings, remember there are lots of other options for your money.

You could pay a chunk off your mortgage, invest in a retrofit for your home, save with an online bank, or invest in a managed fund. We discuss these options here.   

And you can use our free savings account comparison tool to easily compare interest rates from all the main providers and quickly find out where you’ll get the best return for your money!