One of the caveats Central Bank of Ireland governor Philip Lane tied to his idea for another Special Savings Incentive Account (SSIA)-type scheme was that it would have to be counter-cyclical this time, in other words it would run against the prevailing tide.
The problem with the last scheme was that it matured slap-bang in the middle of the boom, flooding an already overheating economy with more money at exactly the wrong time.
It’s not obvious how you would design a scheme in which the savings could only be accessed when things go sour. Lane didn’t provide specifics, but hinted it might be possible to tie such a scheme to a metric like unemployment. But who would buy into a scheme with such an uncertain timeframe?
For all its faults, the original SSIA scheme was at least transparent, offering consumers a top-up of 25 per cent on their savings over a fixed five-year term.
Director of public policy and taxation at Chartered Accountants Ireland Brian Keegan is more keen on the idea of topping up people's retirement funds on the basis that the individual will at some future date need the money.
One way of doing this is via a system known as auto-enrolment, which the Government is actively considering. Under such a scheme individuals would be encouraged to save for retirement by having their pension contributions topped up both by their employers and by government.
As Keegan noted in an article in The Irish Examiner, such a plan is not without its challenges, because there is an expectation that employers will be obliged to make a further contribution over and above the employer PRSI contribution.
Unlike Lane’s SSIA idea, auto-enrolment is more focused on the welfare of the individual rather than the welfare of the economy.
