Special Savings Incentive Account (SSIA) holders whose accounts have matured are now saving more every month than the maximum limit allowed under the scheme, new figures from Bank of Ireland reveal.
The SSIA spending splurge is a myth, according to the bank.
Some 60 per cent of matured SSIA customers are keeping up their regular savings habit and 84 per cent are keeping some or all of their lump sum invested.
The bank reports that the average monthly savings of SSIA customers whose accounts have matured is €270. This is higher than the €254 maximum monthly sum permitted under the Government's scheme, which gives a 25 per cent bonus on savings up to this limit.
Bank of Ireland said the long-term impact of the SSIA scheme was clear. Almost six in 10 of its matured SSIA customers intended to continue their regular savings indefinitely, while a third said they would keep it up for between two and four years.
However, of those who decided to stop making regular savings once their five-year SSIA term finished, just 6 per cent are redirecting this money into a pension plan, the bank said.
The research was conducted on behalf of the bank by Ipsos Mori using a sample of 500 SSIA customers. Bank of Ireland has 272,000 SSIA accounts, which gives it a 23 per cent slice of the SSIA market.
Some 55 per cent of the bank's customers surveyed said they were saving their entire lump sum, with 15 per cent of these not intending to touch the money for at least five years.
Among those who have spent some of their lump sum, 40 per cent said they had used the money to make home improvements.
Clearing debts was the next most popular target for the money, with 20 per cent of the spenders using their lump sums for this purpose. A further 15 per cent have taken a holiday using their SSIA cash.
A customer who contributed the maximum €254 for the full term of the account will have received a lump sum of roughly €20,000, with some equity SSIA customers receiving more than this.
Ronan Headon, head of savings at Bank of Ireland, said its customers had clearly been bitten by the savings bug.
"The success of the SSIA scheme has really been twofold: it has embedded a strong savings culture within those who availed of the scheme and it has highlighted the benefit of regular savings to those who did not," he said.
Previous research by the bank showed that regular SSIA payments caused no financial difficulty for eight out of 10 customers. The majority of the 1.1 million SSIA accounts do not mature until next year, with 50 per cent due to mature in April 2007, the last month possible.
Financial institutions are hoping to avoid a sudden exodus of money from their books at this time by offering new products.
Competition in the market for regular savings has intensified over the past year, with AIB, Bank of Scotland Ireland (now Halifax) and Anglo Irish Bank all paying an interest rate of 6 per cent or more.
Bank of Ireland joined the fray yesterday by improving the rate on its regular savings offer to 6 per cent on monthly savings of up to €1,000.
