What is the Special Savings Incentive Scheme? A Government scheme to encourage people to save rather than spend. The scheme starts today but savers can open accounts up to April 30th, 2002. The accounts should be maintained for five years.

How does it work?

Savers will get £1 (€1.27) per month for every £4 they save. The "free money" will be lodged into each individual's account each month. Savers must choose between cash deposit accounts or equity-based accounts. They should earn either interest on the cash or investment returns based on the performance of their equity account.

At the end of five years, savers will get back the amount they have saved, plus the Government add-on, plus the interest/investment return earned on the account. Tax at a rate of 23 per cent will be deducted from the interest/investment return only.

Free money - is there a catch?

Because the scheme is aimed at encouraging people to save for a five-year period, savers who withdraw funds during the five years will be punished by a tax charge of 23 per cent on the full amount withdrawn.

Who can open an account?

Anyone over 18 years of age resident in the Republic. Savers will have to sign a declaration stating that they have only one SSIS account. They must supply their PPSN (personal public service number) - the old RSI number. Anyone who does not have a PPSN should contact their local Social Welfare office. Savers are expected to fund their accounts without borrowing or deferring payments of interest on existing borrowings.

How can an account be opened?

Having chosen the product that best suits their needs from the wide range on offer from the financial institutions, savers should open their account with the institution offering that product.

How many accounts can I have?

Each saver can have only one account. Husband and wives can each have an account.

How will it work?

Savers can agree to save between a minimum of £10 per month and a maximum of £200. They will get a tax credit from the Revenue which will add an extra £1 for every £4 saved - someone saving £50 per month would get an additional £12.50 under the scheme.

What if I cannot keep saving?

If you have to stop saving, you could just leave the funds in the account and you would continue to earn interest/investment returns. But the monthly Government contribution stops when you stop saving.

If you need to close your account, you will lose out badly because the full amount - your own and the Government contributions - will be taxed at 23 per cent. For example, someone saving £50 per month who had to close their account at the end of year two would have put in £1,200 but would get back only £1,155 (before any interest or investment returns).

What should I do now?

First, don't rush into opening an account - you can have only one account and you have until April 30th, 2002, to open it.

Assess what's on offer and the charges involved. The Irish Times will analyse the products in the Business This Week supplements on May 11th and May 18th. You need to look out for the charges on equity based funds that could eat up much of the investment return. The Irish Times will set out what to look out for in Business This Week on May 4th.

Decide what you want. What level of risk are you prepared to take? You can go for products ranging from minimum-risk cash-deposit accounts to high-risk type equity accounts with low to medium risk type products in between.

Could you continue to save after the Government scheme has ended? In this case, equity products should offer the best returns.

Open an account. An SSIA assures you free money. Try to save as much as you can to get maximum advantage under the SSIS. Over and above the free money, you are building a nice nest egg for the future.