State savings in Ireland

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If you don’t want to pay tax on your savings interest, you might be tempted to invest in a state savings product. But exactly what are state savings and are they the best option for Irish savers?

On this page, you’ll learn how state savings in Ireland work, the different types of products available and how they compare with other savings accounts on the market (state savings may be tax-free, but they may not earn you as much interest as you’d get with other savings accounts).

What are state savings in Ireland and
how do they work?

Ireland State Savings is the brand name for the range of government personal savings products offered by the National Treasury Management Agency (NTMA). They’re also referred to as An Post State Savings or Post Office Savings. 

When you invest in an Ireland State Savings product, you’re effectively placing your money directly with the Irish government. The government is obliged to repay all state savings money, thereby guaranteeing savers complete protection by the state. You can choose from several different types of state savings products, including savings bonds, savings certificates, national solidarity bonds and prize bonds.

One of the main benefits of Ireland State Savings is that any returns you make are tax-free. Interest or prize bond winnings are exempt from deposit interest retention tax (DIRT), which is currently set at 33%. Returns are also exempt from income tax, social insurance (PRSI) and capital gains tax in Ireland. 

To access your initial investment and any interest earned, you simply need to give seven days’ notice. There’s no penalty for accessing your cash early, since repaying you is part of the Government’s obligation.

Ireland State Savings products explained

There are several types of Ireland State Savings products available. Here’s a brief overview of the products you can choose from:

A savings bond is a three year fixed rate savings account. Ideal for short to medium term savings goals, Irish savings bonds provide a fixed rate of return and can be redeemed at any time. You can currently save a minimum of €50 and a maximum of €120,000 in a savings bond (per individual, per issue).

Savings certificates last for five years, making them a good option if you’re looking to save over the medium term. They usually offer a slightly higher rate due to the longer duration. As with savings bonds, the minimum investment for savings certificates is €50, while the maximum is €120,000 for individuals and €240,000 for joint holdings.

Available for a duration of either four or 10 years, national solidarity bonds are considered a mid- to long-term investment. As market interest rates can alter a lot in 10 years, signing up to a 10 year bond could mean the agreed rate ceases to be competitive by the end of the term. The same maximum investment amount applies as for savings bonds and certificates.

Rather than earning interest on your savings, you could use some of your spare cash to buy prize bonds. Prize bonds are entered into a weekly prize draw, with prizes ranging from €50 to €50,000 and a €250,000 prize awarded four times a year. Approximately 3,800 prizes are awarded every week.

You can buy prize bonds in units of €6.25 with a minimum purchase of four units (equating to €25). There’s a maximum cap of 40,000 units per individual (worth €250,000). If your prize bond is one of those selected, you can choose to have your winnings paid into your bank account or reinvested to buy more prize bonds. Prize bonds never expire and can be cashed in at any time after the minimum 90-day holding period.

Just like the other Ireland State Savings products, prize bonds are protected in full by the Irish government.

See how these Ireland State Savings compare with the best-paying savings accounts at Raisin Bank:

Are Ireland State Savings and An Post State Savings the same thing?

Generally speaking, Ireland State Savings and An Post State Savings refer to the same government-backed savings products.

Ireland State Savings are offered by the NTMA and can be bought directly via the Ireland State Savings website. An Post is responsible for the sale and administration of Ireland State Savings products, which you can open through Irish post offices.

Whether you call them State Savings, An Post State Savings or Post Office Savings, you’re effectively referring to the same range of savings products.

Are Ireland State Savings a good option?

For many people, the flexibility and tax-free status of State Savings is an attractive proposition. Although these are worthwhile benefits, they need to be weighed against the rate of return.

Interest rates on Ireland State Savings aren’t as competitive as they once were. In 2021, the NTMA cut the interest rates on a range of Ireland State Savings products in response to “reductions in interest rates in both sovereign bond yields and the retail savings market.” Prize bond awards were also scaled back, with the two €1m top prizes replaced by four €250,000 top prizes. This equates to a reduction of €1m in the top prize.

State savings in Ireland may still offer better returns than other products from some Irish banks, but it’s important to check the facts before you commit. These products often highlight the ‘total return’ figure, which takes into account how much you would make over, say, a 10 year deposit. This total figure might seem attractive, but it’s much better to concentrate on the AER (annual equivalent rate) percentage, which allows for more meaningful comparison.

What is AER, and how does it work?
What is AER, and how does it work?

Find out all you need to know about AER and why understanding how it works will make it easier to compare savings accounts.

Read more

For example, let’s say you invest €1,000 into a savings bond for 10 years that promises a 16% return rate. At the end of the term, you’ll receive €1,160. While this €1,160 technically amounts to a 16% increase from the original amount, it could be misleading as you might think based on the advertised 16% return that you would get 16% interest per year. However, your final figure of €1,160 actually equates to an AER of 1.5%, which you then earn 10 times (once per year).

Ireland State Savings still have their place, particularly if you’re looking for a tax-free way to save, but it’s worth comparing a range of products from the wider market to ensure you’re getting the best return.

Ireland State Savings vs Raisin savings accounts

With some State Savings no longer offering competitive rates of return, it might be worth looking beyond Ireland’s borders if you want to make the most of your savings in a low risk product. The Raisin marketplace allows you to compare high-interest savings products from a range of European banks. 

Unlike the Ireland State Savings bond which has a minimum duration of three years, our minimum term for selected fixed term deposits is just six months. You still benefit from the security of a guaranteed interest rate, but with a wider range of saving terms to choose from. Simply compare the offers in the table to find the perfect product for your needs.

What’s more, all savings invested through our European partner banks are protected under the European deposit guarantee scheme (EDIS). Following the introduction of EU-wide legislation, up to €100,000 per person, per banking institution, is protected in the event your bank fails.

Start saving with Raisin Bank

Saving in Europe has never been easier. Simply register for a Raisin Bank Account to access a wide range of competitive savings accounts from across the continent.

From high interest fixed term deposits to flexible demand deposit accounts, you’re sure to find a product that meets your savings goals.