The National Treasury Management Agency said it is increasing the rates that apply to new fixed term and variable rate State Savings products.
It also said it will almost treble the Prize Bond fund on offer to holders of Prize Bonds to €48m.
All new interest rate changes and the new Prize Bond fund structure will be effective from October 1, 2023 it added.
State Savings is the brand name used to describe the range of Irish Government savings products offered by the NTMA to personal savers. It offers fixed-term fixed-rate savings products, Prize Bonds and deposit accounts.
State Savings have no fees or transaction charges when lodgements and withdrawals are made and the State Savings Fixed Term Products are also tax free savings products.
The NTMA said the total tax free return on the new fixed rate State Savings products will see the 3-Year Savings Bond increase from 1% to 4%, while the 5-Year Savings Certificate from rise from 5% to 9%.
Its 6-Year Instalment Savings from go up from 5.5% to 10% and the 10-Year National Solidarity Bond from increase from 16% to 22%.
The NTMA also said the variable rate used to calculate the total prize fund is increasing from 0.35% to 1% of the total value of Prize Bonds, while the prize fund is almost trebling in size and prizes remain tax free.
Under the new prize structure, a top monthly prize of €500,000 will be offered, in the last weekly draw of every calendar month, compared to the previous top monthly prize of €250,000.
A top weekly prize of €50,000 will be available in every weekly draw from October 1, while each week there will be 20 prizes of €1,000 and 20 prizes of €500, compared to 10 prizes of €1,000 and 10 prizes of €500.
The remaining weekly prize fund will be awarded in €75 prizes, which is an increase in the previous minimum prize of €50.
Overall, the number of prizes is expected to double to half a million a year, the NTMA said.
The total value of State Savings holdings stood at €24.9 billion at the end of July.
Dave McEvoy, NTMA Director of Funding and Debt Management, said that in setting interest rates on State Savings, the NTMA seeks a balance between providing customers with a savings option and providing long-term value to the Exchequer in terms of managing the cost of borrowing.
“Rates are subject to ongoing review and take account of a number of factors, which include the wider interest rate environment, the strength of the State’s fiscal and funding position, and competitive developments in the retail savings market,” he added.
The Minister for Finance Michael McGrath welcomed today’s news from the NTMA.
“It has been widely discussed that the interest rate environment has changed significantly over the last 12-18 months, and I welcome today’s announcement by the NTMA to increase rates,” Mr McGrath said.
“This will provide State Savings customers with an increased return on all new fixed-term savings and deposit accounts, along with an increased Prize Fund for Prize Bond holders from 1st October 2023, while also supporting the valuable conduit that State Savings provide for the Irish State to raise funding,” he added.
A full range of the State Savings products are available on the NTMA website.