IN SPITE of recent interest rate cuts, An Post continues to offer attractive returns to many savers.

This month the company launched a new Instalment Savings Scheme. Under the scheme, investors can save on a monthly basis for a year and then leave the money on deposit for a further five years. No interest is payable during the contribution period. Interest is calculated thereafter on an annual basis.

Post Office savers must complete an application form and return it with the first instalment. A personalised book of lodgement slips will be issued, to facilitate payment of monthly instalments.

Customers saving through a Group Savings Scheme at their workplace may obtain applications from the group secretary in their workplace, or from An Post, Investment Services, College House, Townsend Street, Dublin 2.

The average annual compound rate is 5.61 per cent, taking into account the contribution period. Instalment Savings are State guaranteed and interest is tax free.

Under the new scheme, the minimum monthly instalment has been increased from £200 to £300. There is a direct debit option for investors and facilities for joint accounts, trustee and child accounts.

There is also automatic annual renewal without the need to enter into a new agreement with an option to revise the savings amount. Investors are guaranteed a rate of 35 per cent over five years, from the end of the 12 month contribution period.

Instalment Savings Agreements may be entered into with An Post or TSB Bank, acting on behalf of the National Treasury Management Agency. Investors may also participate in Group Instalment Savings Schemes operated by certain employers.

Tax free Post Office savings certificates and savings bonds continue to be popular. Savings certificates are the most important and successful of the State savings schemes. Since February, the latest issue has seen the rate of return cut by 0.5 per cent to a compound 5.5 per cent per year.

Savings bonds have been in existence since 1975 and have been particularly successful in the last year. The new issue of savings bonds saw the annual rate of return cut by 1 per cent to 5.38 per cent.

The new savings certificates offer a guaranteed return of 34.5 per cent tax free after five and a half years. The new savings bonds offer a guaranteed return of 17 per cent tax free after three years.

An investment of £1,000 in savings certificates, would be worth £1,040 after one year, £1,133 after three years and £1,345 after five and a half years.

The guaranteed rates of return for existing investors in savings certificates and savings bonds will not be affected by these changes.

The total amount invested in savings bonds at the end of 1995 was over £800 million. Approximately £1.93 billion was out standing in savings certificates at the end of last year.

Savings certificates have been continuously in issue since the 1920s. Interest on certificates is calculated on a six monthly basis and at maturity. Interest on bonds is calculated on an annual basis.

There are no fees, charges or transaction costs on both certificates and bonds. Individuals may invest any amount up to a maximum of £60,000 in the new issue. Joint holdings are subject to a ceiling of £120,000.

There is a minimum investment of £50 for certificates and £100 for bonds. Withdrawals for both are subject to seven working days notice.

As with most banks, the compound annual rate An Post offers on Demand Deposit Accounts is small, just 0.5 per cent for amounts under £3,000. This is subject to deposit income retention tax (DIRT) at 27 per cent. The Deposit Account Plus offers a rate of 4 per cent, for amounts under £5,000. This account is subject to DIRT at 15 per cent.