Government looks to encourage people to save with introduction of new incentive scheme.

With people spending and borrowing like never before, it seemed that savings had gone out of fashion.

Saving doesn't seem to be the in thing.

To counteract this, Minister for Finance Charlie McCreevy has announced a new incentive scheme to encourage people to save more.

For each £200 saved there’s a £50 top up from the Revenue.

Under the Special Saving Incentive Accounts (SSIA) the money must be invested for five years and at the end of five years. If a person saves £50 a month over five years, the total amount saved will be £3,000. Revenue will add £750. The total return after tax and including interest would be £4,050, a total gain of £1,050.

Minister Charlie McCreevy says that based on anecdotal evidence people do not provide for a rainy day as they did in the past.

The new scheme is expected to have huge public take up at a time when interest rates on deposit accounts are very low. However, Fine Gael finance spokesperson Jim Mitchell criticised the scheme describing it as,

A desperate act by the government.

He is critical of the government’s overall handling of the economy and said that there is nothing to stop investors simply switching money from other investment accounts.

The minister also introduced new tax exemptions on stock options and new measures to make charitable donations more tax-efficient.

An RTÉ News report broadcast on 15 February 2001. The reporter is Eilis Brennan.