The National Solidarity Bond was first announced in the 2010 Budget and it was launched in April 2010 . At the launch it paid an annual interest rate of 1% a year (fixed) with added bonuses for those who left the money in for five, seven and ten years .
Update : June 2013 – The interest rates and bonuses for new investors in the National Solidarity Bond have been reduced from June 3rd 2013 – details of the original rates and the new lower rates are given below .
Rates of Return on 10 Year Solidarity Bonds bought before June 3rd 2013
The maximum maximum gross return possible was 50% over 10 years .
If you cash in the bond at the end of 5 years you will get a 10% Bonus
At the end of 7 years you will get a 22% Bonus and if you keep the bond for 10 years you will get the maximum 40% Bonus. DIRT will be payable on the basic interest – but not on the bonuses.
A 50% gross return over 10 years is 4.14% AER . After DIRT this comes to 3.96% AER.
An investment of €1000 in solidarity bonds for 10 years will result in a balance of €1475. (3.96% AER Net)
Keeping €1000 in the solidarity bond for 5 years will give a balance of €1137.50 – after DIRT which is 2.5% AER (Net).
Rates on bonds bought from June 2013 Onwards
The maximum maximum gross return possible is now 35% over 10 years.(reduced from 50%)
The annual rate of 1% interest remains the same but the bonuses have been reduced .
If you cash in the bond at the end of 5 years you will get a 6% Bonus instead of 10%
At the end of 7 years you will get a 13% Bonus (reduced from 22%) and if you keep the bond for the full 10 years you will get the highest 25% Bonus. DIRT will be payable on the basic interest – but not on the bonuses.
A 35% gross return over 10 years is 3.05% AER . After DIRT this comes to 2.79% AER.
An investment of €1000 in solidarity bonds for 10 years will result in a balance of €1317 Net
Rules
The maximum individual investment allowed in the solidarity bond is €250,000 . (€500,000 for joint accounts) There are no fees, charges or sales commissions attached to the bond.
The bonds are available for purchase in all post office.
The minimum individual investment in this Solidarity Bond is €500 . Savers can deposit a lump sum or put in regular lodgements of €25 or more. (The €25 a month will be put in an An Post deposit account until you reach a balance of €500 – after 20 months).
Savers can access their money at any time without penalty – but the longer money is left invested the greater the return in the form of bonuses.
Money invested in these solidarity bonds will be used by the government to finance capital-investment programmes.
See other bank savings rates for comparison.
I opened an account for my daughter in 2010, thinking I would receive a 50% return on my investment in 10 years. I recieved a letter yesterday stating that my return is 35% now, is this right?
Natalie – did the letter refer to the bonds you bought or was it just a leaflet telling you the new rates for new investors? If you bought the first issue of the solidarity bond the rate remains as it was. The new lower rate is for new purchaese after June 2013.
last year 2012 was year 3 of my 3 year bond and i got the largest amount of interest of the three years i think they pay approx 2%, 3% and 5% in years 1,2and 3 respectively. this 5% pushed me over the limit for my son to be eligible for his susi grant for college which amounts to over 6000 euros including fees of 2500. should this interest be used to calculate my income and bring me over the limit. i would be better to give the interest back if so.now i will have to pay out 2500 euros and he will have to live on beans on toast to continue in college. surely if revenue dont treat this money as income susi should not either, but it is not in their list of excempt income. other parents beware if college years are looming to ensure interest doesnt push you over the limit. ialso put some money away with irish life for four and a half years, but i will get no interest on this until thew end of the term- so much better.